The Effect of Increasing the Number of Wind Turbine Generators on Carbon Dioxide Emissions in the Australian National Electricity Market from 2014 to 2025

Abstract

This report investigates the effect of increasing the number of wind turbine generators on carbon dioxide emission in the Australian National Electricity Market’s (NEM) existing transmission grid from 2014 to 2025. This report answers urgent questions concerning the capability of the existing transmission grid to cope with significant increases in wind power and aid emissions reductions. The report findings will help develop a coherent government policy to phase in renewable energy in a cost effective manner.

We use a sensitivity analysis to evaluate the effect of five different levels of wind penetration on carbon dioxide emissions. The five levels of wind penetration span Scenarios A to E where Scenario A represents ‘no wind’ and Scenario E includes all the existing and planned wind power sufficient to meet Australia’s 2020 41TWh Large Renewable Energy Target (LRET). We also use sensitivity analysis to evaluate the effect on carbon dioxide emissions of growth in electricity demand over the projections years 2014 to 2015 and weather over the years 2010 to 2012. The sensitivity analysis uses simulations from the ‘Australian National Electricity Market (ANEM) model version 1.10’ (Wild et al. 2015).

We find increasing wind power penetration decreases carbon dioxide emissions but retail prices fail to reflect the decrease in carbon dioxide emissions. We find Victoria has the largest carbon dioxide emissions and of the states in the NEM Victoria’s emissions respond the least to increasing wind power penetration. Victoria having the largest brown coal generation fleet in the NEM explains this unresponsiveness. Wind power via the merit order effect displaces the more expensive fossil fuel generators first in the order gas, black coal and brown coal. However, brown coal has the highest carbon dioxide emissions per unit of electricity. This is suboptimal for climate change mitigation and the reintroduction of a carbon pricing mechanism would adjust the relative costs of fossil fuels favouring the fuels with the lower emissions per unit of electricity.