UPDATE FROM

MANAGING
DIRECTOR
AND CEO
MATT ZEMA
It is no longer new
news that the energy
industry is undergoing
an unprecedented
transformation. Every day,
we hear about sweeping
technological advancements
in gas, electricity and
renewables; we debate
how to update our existing
regulatory and policy
frameworks to reflect the
changing generation mix and
the rapid development of
Australias energy markets;
and we marvel at the
challenges and opportunities
borne out of increasing
consumer engagement
when it comes to choice and
energy supply solutions.

We are an industry in transformation

but as seen in this Energy Update,
it is clear that our industry has the
vision, leadership, and discipline to
work together and pool our knowledge
and resources. In doing so, we have
the opportunity to influence the future
direction of the sector, to support
improved information and data, stronger
competition, and increased market
efficiency and productivity, for the
benefit of Australian consumers
and industry participants.
The National Gas Market Bulletin Board
(NGMBB), which AEMO presented at
the Australian Domestic Gas Outlook
Conference in Sydney in March, is a vital
initiative to give gas market participants
more transparent, accurate and accessible
information. The NGMBB is the result
of close consultation between AEMO
and gas market participants, and a great
example of industry working together to
develop an end product that is timely,
strategic, and future-focused.
And just 12 months after AEMO launched
Australias first voluntary gas supply hub
in Wallumbilla, Queensland, we celebrate
the April listing of the Wallumbilla Gas
Futures, a joint project of AEMO and the
Australian Stock Exchange (ASX). The
establishment of a gas futures market is
an important step in helping participants
manage risk by providing greater price
transparency, and is another example
of industry working together to pursue
growth opportunities and develop
timely solutions.

In developing our 2015 Gas Statement

of Opportunities (GSOO) published this
month, it became clear that the rate and
scope of change in our energy markets
increases the challenge of sourcing
reliable information, hampering industrys
ability to make informed decisions and
implement strategic responses in this
time of change. Therefore, accessibility
to accurate data is increasingly valuable
to industry participants, governments,
regulators, and consumers in terms of
energy supply and security, and future
investment opportunities.
This is an ongoing issue for the
energy industry, and one recognised
by the Federal Government which
has announced that the Australian
Competition and Consumer Commission
(ACCC) will conduct a 12-month public
inquiry into the competitiveness
of wholesale gas prices in eastern
and southern Australia.
Reliable, transparent, and accessible
information is increasingly critical to an
industry looking to successfully navigate
and shape this new world order, and
this is a topic we intend to explore
in more detail at our Members
Briefing on 14 May.
We will continue to pursue diverse
opportunities to give industry and
consumers better quality information to
address the challenges and opportunities
of our fast-changing industry as quickly,
efficiently, and effectively as possible.

CONTENTS
02 Update from Managing Director and CEO Matt Zema

06 Sunny days ahead for Nyngan Solar Plant

03 No short-term gas supply gaps expected

07 The people behind AEMO

04 New products, big impact

08 In brief

05 ASX and AEMO launch Wallumbilla Gas Futures

P2

Energy Update April 2015

N O S H O R T- T E R M
G A S S U P P LY
GAPS EXPECTED
AEMOs 2015 Gas Statement of Opportunities (GSOO),
released on 13 April 2015, forecasts no supply gaps for
any of Australias eastern and south-eastern gas markets
over the short term to 2019.
The 2015 GSOO reports on the adequacy
of eastern and south-eastern Australian
gas markets to supply maximum demand
and annual consumption, as forecast in
the 2014 National Gas Forecasting Report
(NGFR) published in December.
Lower than forecast consumption levels,
most notably in the industrial sector
within Queensland and New South Wales,
combined with upgrades to gas market
infrastructure, have alleviated short-term
supply gaps that were forecast by AEMO
in its previous GSOO update in mid-2014.
Matt Zema, AEMO Managing Director
and Chief Executive Officer, said the shift
in supply forecasts illustrates the dynamic,
ever-changing natural gas landscape,
most notably following the initiation of
liquefied natural gas (LNG) exports.
Australias eastern and south-eastern
gas markets are experiencing rapid
transformational change. The 2015 GSOO
points to a 17%* forecast decline in New
South Wales gas consumption in 2019
and identifies crucial upgrades to gas
market infrastructure, such as the
commissioning of the Newcastle LNG
storage facility, said Mr Zema.

A fall in the forecast demand, increased

capacity of the Victoria New South
Wales interconnector, and upgrades to the
MoombaSydney and MoombaAdelaide
pipelines, all reduce the potential for
supply gaps in the short term,
said Mr Zema.
The forecast medium and long-term
supply gaps equate to 214 petajoules
(PJ), down from the 1,000 PJ anticipated
in the 2013 GSOO, largely due to lower
gas consumption forecasts following a
reduction in the industrial consumption
across eastern and south-eastern gas
markets, said Mr Zema.
The 2015 GSOO also confirms that the
Victorian Declared Transmission System
(DTS) can supply the maximum forecast
1-in-20-year gas demand of 1,257
terajoules per day from 20152019.
* The 17% reduction is due to the decline in

residential, commercial and industrial demand in

New South Wales, as reported in the National Gas
Forecasting Report (NGFR) of December 2014.

Energy Update April 2015

P3

NEW
PRODUCTS,
B I G I M PA C T

A shared platform to
support key market
processes will support the
efficient deployment of
new electricity products
and services. This, and a
range of other reforms will
help drive a more efficient,
more competitive, and more
environmentally sustainable
electricity market, according
to a new AEMO submission
to the Council of Australian
Governments (COAG)
Energy Council.

Following a collaborative effort by our

Corporate Development, Operations,
and Markets departments, the submission
states it is critical that regulatory
structures allow our energy markets to
evolve in light of the massive change
taking place, rather than entrench
existing structures.
Energy markets are developing and
changing quickly in terms of who
interacts with customers, the products
and services offered, and how customers
source energy services, says AEMO
Executive General Manager Corporate
Development David Swift, who recently
presented on the topic at a COAG
Energy Council workshop, highlighting
how risks to network and market
operations from new products and
services can be managed.
The current retail framework reflects a
market model that prevailed a decade
ago, when the potential and scale of
embedded generation or storage
technology was not envisaged,
he said.
What were seeing now are new
business models and service providers
seeking to develop new products to
leverage the customer response.
Markets are also transitioning, to offer
a variety of products and services with
an increased focus on unbundling.
As an example, advances in metering
mean that service providers can now
develop products tailored to the needs of
individual customers, where before usage
patterns were much more opaque.

P4

Energy Update April 2015

New and alternative energy services

including from the grid, off the grid,
photovoltaic, energy storage, electric
vehicles and so on are also emerging
alongside new technologies, like smart
devices, to help us better understand
and manage energy use.
The submission states a streamlined
regulatory framework focused on future
needs, and which supports efficient
network pricing including tariffs that
give customers the opportunity to
respond to price signals is necessary.
Greater network access is also
needed to ensure our markets evolve
efficiently. Networks should develop
business models that do not inhibit the
development of competitive markets,
to support new products and services,
Mr Swift said.
Importantly for AEMO, we need
appropriate access to information to
operate the market and maintain power
system security and reliability. The risk
for us is that we lose visibility of what
is happening behind the meter, which
could compromise system security
and undermine our ability to
prepare accurate forecasts.
For more information contact AEMO
Executive General Manager Corporate
Development David Swift or see the
presentation on the COAG website.

ASX AND
AEMO LAUNCH
WA L L U M B I L L A
GAS FUTURES
This month, the ASX and
AEMO launched the ASX
Wallumbilla natural gas
futures, which commenced
trading on 7 April 2015.

The establishment
of a gas futures
market is an
important step
towards increasing
transparency and
competition in
Australias growing
eastern and
south-eastern
gas markets.
Mr Matt Zema, AEMO
Managing Director and
Chief Executive Officer.

The launch comes a year after AEMO

established Australias first voluntary gas
supply hub in Wallumbilla, Queensland.
The Wallumbilla End of Day Benchmark
price will be used as the reference price
for ASXs new gas futures contract.
The listing coincides with a significant
change in the dynamics of the Australian
east coast gas market, with the start of
liquefied natural gas exports moving an
increasing number of molecules offshore.
ASXs Deputy Chief Executive Officer
Peter Hiom said, ASX is committed
to supporting the development of
Australias energy markets. Our new
futures products help gas industry
participants manage their forward
price risk and will provide greater price
transparency both critical ingredients
for customers in growing
their businesses.
Matt Zema, AEMO Managing Director
and Chief Executive Officer, said that the
establishment of a gas futures market
will greatly assist the gas industry, and
is an important step towards increasing
transparency and competition in
Australias growing eastern and
southeastern gas markets.

The new ASX gas futures are part of

ASXs expanding energy derivatives
business, which is designed to meet the
risk management needs of Australian
energy participants. They complement
ASXs existing electricity derivatives
product suite, which has grown 18%
year-to-date compared to the same
time last year, from 135,329 to 159,455
contracts traded, or the equivalent
of 1.8 million megawatt hours of
electricity per day.
Mr Zema said that AEMO held regular
meetings with industry to refine its
benchmark price methodology in keeping
with industry needs and expectations.
Industry has been supportive of
mechanisms to facilitate the development
of a derivative market in gas, with the
publication of a benchmark price being
integral to the process, said Mr Zema.
For more information about the
Wallumbilla End of Day Benchmark
price, contact AEMO Trade Facilitation
Specialist Angelo Mantsio.

Participants will be able to use the

Wallumbilla Gas Supply Hub Benchmark
price as a basis price for their gas
contracts, with the development of
a derivatives market providing a risk
management tool for forward pricing
and planning, said Mr Zema.

Energy Update April 2015

P5

S U N N Y D AY S A H E A D
FOR NYNGAN
SOLAR PLANT

The Nyngan Solar

Plant is an example of
the National Electricity
Markets evolving
generation mix.
AEMO Group Manager
Forecasting Louis Tirpcou.

Nyngan Solar Plant photo courtesy of AGL.

The first large-scale solar

generating plant to be
registered in AEMOs
Australian Solar Energy
Forecasting System
(ASEFS) production system
commenced operation in
March. The Nyngan Solar
Plant, a 102 megawatts
(MW) solar plant located
10 kilometres west of the
New South Wales town
of Nyngan, has begun
generating up to 25 MW
of electricity as it ramps
up to full capacity.

P6

Energy Update April 2015

ASEFS was a joint project, with

collaboration between organisations
including CSIRO, AEMO, the Bureau
of Meteorology, and several Australian
universities. ASEFS joins the existing
Australian Wind Energy Forecasting
System (AWEFS) in meeting AEMOs
obligations under the Rules for
intermittent generation.
AEMO Group Manager Forecasting
Louis Tirpcou said the introduction of the
ASEFS was key to facilitating increased
participation from large-scale solar
generation in the National Electricity
Market (NEM) and improving AEMOs
ability to forecast the solar energy
contribution to electricity supply.
To date, solar generation has largely
been confined to residential photovoltaic
(PV). The Nyngan Solar Plant is an
example of the NEMs evolving
generation mix and was the first
semi-scheduled solar plant in the
NEM to register in ASEFS in
December last year, said Mr Tirpcou.

Once in production, two AGL-owned

solar plant projects this one at Nyngan
and a second to be built at Broken Hill
with a generating capacity of 53 MW
will produce around 360,000 megawatt
hours (MWh) of electricity annually.
The Nyngan plant comprises around
1,350,000 solar PV north-facing modules
installed on frames. The modules are
wired together in arrays and connected to
inverters to transform the direct current
that is produced into alternating current
to be fed into the electricity network.
The Nyngan plant has been developed
with funding assistance from the
Australian Renewable Energy Agency
(ARENA) and the New South Wales
Government. There are only two
other small non-scheduled solar
plants in the NEM.
For more information see the
Nyngan Solar Plant fact sheet.

THE PEOPLE
BEHIND
AEMO
INTRODUCING
M AT T A R M I TA G E
A N A LY S T, N AT I O N A L
P L A N N I N G AT A E M O
In a new column for
Energy Update, we take
you behind the scenes at
AEMO, introducing you to
some of our employees.
In this edition we talk to
Matt Armitage ahead of
his presentation to the
Australian Energy Storage
Council Conference on
3-4 June 2015.
Energy Update (EU): Thank you for
sharing your story with us, Matt. Lets
start with your background?
Matt Armitage (MA): I started my career
as a Chartered Accountant and Tax
Adviser in the United Kingdom. After
working in the financial services sector
for a number of years, I realised that I
simply wasnt impassioned by tax and
accounting. My wife and I relocated to
Australia in early 2011 so that she could
be closer to her twin brother who had
been here for years, and I saw this as an
opportunity to focus on a career that I
could feel truly excited about. The energy
and resources sector is arguably the
largest industry in Australia, and given
the ever-changing energy landscapes,
I went back to school and studied
a Masters in Energy and Resources
Management. The research phase
of my Masters led to a role at
AEMO in March 2014.

EU: What was the focus of your research?

EU: Whats it like working at AEMO?

MA: I looked at the economics of

residential electricity storage (RES)
battery systems that complement solar
photovoltaic (PV), now being sold to
grid-connected consumers. Many people
believe this technology could disrupt
the electricity industry in the future. My
research paper used a cost optimisation
model to analyse the economic viability
of battery-based RES for residential
consumers today, and to project the likely
paybacks for such systems when investing
over the next decade. I also looked into
how RES could impact the National
Electricity Market (NEM) in terms of the
timing, volume and volatility of residential
demand for grid delivered electricity. I
wrote, and still strongly believe, that a
lot of work is required by the industry
as a collective to ensure that storage
and other emerging technologies are
integrated into the NEM effectively as
the uptake from consumers increases.
But from my experience in the industry
so far this topic is a high priority for
most people, which is great.

MA: I love it here! I love the people as

there is a real breadth of backgrounds
and diversity. As a career transitioner,
AEMO welcomed my diverse, nontraditional engineering background. I
am the only non-engineer in my team in
the National Planning division, but I feel
truly welcomed by my colleagues who are
assisting me in getting up to speed on
the technical side of things.

EU: Is this the subject of your

presentation at the upcoming Australian
Energy Storage Council conference?

EU: The energy sector can be daunting

for newcomers. Any tips for those
interested in a career in energy?
MA: I love to speak to people who have
years of experience and wisdom. I have
found people, not just at AEMO but
across the broader industry, to be very
open and generous with their time.
So my tip is to listen to the experts
and ask as many questions as you can.
Matt Armitage will be speaking at the
Energy Storage Council Conference in
Sydney at Australian Technology Park
on 3-4 June 2015. For more information
on the Conference, please visit the
website or contact Matt directly.

MA: Yes. Electricity storage is a very

exciting subject. There are certainly
some limitations for the widespread
introduction of energy storage systems,
most notably the high cost of the
technology. However, with a reduction
in cost, combined with changes to tariffs
to incentivise uptake, and possible
changes to the business models that
deliver this technology to consumers,
I believe adoption of this technology
will be sooner than many believe.

Energy Update April 2015

P7

IN BRIEF
A E M O S Q U E E N S L A N D O P E R AT I O N S
ON THE MOVE
AEMO is pleased to
announce that it will be
relocating its existing
Queensland operations
from Mansfield to 10 Eagle
Street in the Brisbane central
business district (CBD).

AEMO Managing Director and Chief

Executive Officer Matt Zema said the
Mansfield site has served AEMO well
over the years.
We are proud of the diverse team
environment and the culture of hard work
and commitment we have developed at
Mansfield over the years, and we look
forward to building on this legacy at our
new office in the Brisbane CBD,
Mr Zema said.
The move to 10 Eagle Street will
position AEMO for a successful future
by ensuring our people and systems
continue to be accommodated in

modern and functional facilities that

are fit-for-purpose, adaptable, and
centrally located for the convenience
of employees, visitors and industry
stakeholders.
Mr Zema said AEMO is closely managing
the relocation process and working with
our stakeholders to ensure that there is
no disruption to critical systems, and only
minimal impact on employees and market
participants during the transition.
AEMO is planning for a smooth
transition of our Queensland operations,
which we expect to be completed by
early 2016, said Mr Zema.

A E M O B O A R D U P D AT E
AEMO has commenced a
formal search for a new chair,
and also to fill an existing
vacancy on the AEMO board
for a non-executive director.
In accordance with AEMOs Constitution,
the search for a chair arises due to the
retirement of current chair, Dr Thomas
(Tom) Parry AM, when his second term
concludes at the annual general meeting
to be held in November 2015.AEMO has
engaged board search firm Heidrick &
Struggles to undertake the search for
a new chair.

For the non-executive director vacancy, the

Board is seeking suitable candidates who
have experience leading transformational
change driven by technology.While
experience in the energy industry, markets
or utilities is desirable, it is not considered
essential.AEMO has engaged a separate
board search consultancy, Boomerang, to
conduct this search.

undertaken candidate interviews and is in

a position to make recommendations for
the appointments to AEMO Members.
At that meeting, Members will consider
whether they agree to recommend the
candidates to the COAG Energy Council
for appointment. This meeting will also
consider any directors eligible
for reappointment.

Both appointments must meet the

independence criteria set out in
AEMOs Constitution.

Further information on the process

for appointment is available on the
AEMO website.

AEMO Members are welcome to refer

potential candidates for both positions to
the relevant executive board consultancy.

For more information on the selection

process or the Special General Meeting,
please contact AEMO Company Secretary
and General Counsel, Brett Hausler.

A Special General Meeting will be

held once the Council of Australian
Governments (COAG) Energy Council
Appointments Selection Panel has

AEMO TRAINING

FOLLOW US ON

AEMO is pleased to announce its first Overview of the National Electricity

Market session for Hobart, Tasmania, scheduled for 4 June 2015.
Twitter
Course

Location

Date

Understanding MSATS

Melbourne

6-7 May

Metrology for the National Electricity

Market

Sydney

6-8 May

Overview of the National Electricity Market

Brisbane

14 May

Overview of the Short Term Trading Market

Sydney

28 May

Overview of the National Electricity Market

Hobart

4 June

Overview of the National Electricity Market

Sydney

25 June

For more details on all courses, and on how to register, visit AEMOs
Learning Centre or call the Information and Support Hub on 1300 236 600.

P8

Energy Update April 2015

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