Cornwall Insight Australia releases research on solar FCAS regulation costs
Published by Sarah Smith,
Assistant Editor
Energy Global,
Latest research from Cornwall Insight Australia shows that solar farms are responsible for paying somewhere between 10% Cornwall Insight Australia has released new research stating that solar farms are paying approximately 10% - 20% of total regulation FCAS costs- 20% of total regulation FCAS costs in any given month (see Figure 1).
This is disproportionate to solar’s energy generation in the NEM, which in FY20, was only ~3%. In contrast, wind is far more proportionate with cumulative FCAS causer pays factors accounting for ~10% of FCAS regulation costs. Wind provided ~9% of total generation for the NEM in FY20.
In fact, calculations by Cornwall Insight Australia highlights that FCAS causer pays costs solar farm owners, conservatively, around AUS$2,368/MW/y, which is ~AUS$1.55/MWh. In 2019, this was closer to AUS$5.5/MWh. It should be noted that not all regions are created equal, with solar farms in Queensland in FY20 on average having higher causer pays factors than other states.
Ben Cerini, Principal Consultant at Cornwall Insight Australia, said:
“Since 2018, regulation FCAS costs have fluctuated between AUS$10-$40 million a quarter. 2Q20 was a relatively small quarter by recent comparisons at AUS$15million with the last three quarters before that more than $35million a quarter.
“Renewable energy generators have historically turned off to avoid negative pricing. However, a new operational consideration for renewables is the liability that high regulation FCAS prices pose to the profitability of current and future renewable energy projects.
“As wholesale prices have fallen, potential power purchase tenures have shortened, and loss factors have fluctuated. Developers and investors are aware of any increased risk to project costs. FCAS liabilities are now firmly on the due diligence agenda as new projects look to forecast the future cost of regulation causer pays.”
Read the article online at: https://www.energyglobal.com/solar/25082020/cornwall-insight-australia-releases-research-on-solar-fcas-regulation-costs/
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