2013 ESOO METHODOLOGY

Methodology for the Electricity Statement of Opportunities

2013





2013 ESOO METHODOLOGY
ii Contents AEMO 2013
Disclaimer
Note this document is subject to an important disclaimer which limits and/or excludes AEMOs liability for reliance
on the information in it.
Please read the full disclaimer at the end of the document at page D1.

Revision History























Published by
AEMO
Australian Energy Market Operator
ABN 94 072 010 327

Copyright 2013 AEMO

Number Date Notes
1 August 2013 First issue

AEMO 2013 Introduction iii
CONTENTS
CONTENTS III
FIGURES IV
1 INTRODUCTION 1
2 ESOO MODELLING 1
2.1 Aims and scope 1
2.1.1 The Reliability Standard 1
2.1.2 Inter-regional reserve sharing 2
2.2 Inputs 2
2.3 Methodology 4
2.3.1 Modelling and reporting demand in the ESOO 4
3 ACCOMPANYING INFORMATION 5
3.1 Modelling results 5
3.1.1 Interpreting the ESOO adequacy chart 6
3.2 NEM Historical Market Information report 7
3.2.1 Wind contribution to peak demand 7
3.3 Changes from 2012 8
IMPORTANT NOTICE D1


2013 ESOO METHODOLOGY
iv Figures AEMO 2013
FIGURES
Figure 1 ESOO modelling inputs and outputs 3
Figure 2 ESOO modelling methodology flow-chart 4
Figure 3 Example ESOO adequacy chart 7



AEMO 2013 Introduction 1
1 INTRODUCTION
The purpose of this document is to provide further information on the following:
The methodology used to develop the 2013 Electricity Statement of Opportunities (ESOO).
The detailed modelling results that accompany the 2013 ESOO.
AEMO continues to improve the focus and clarity of its planning publications, targeting succinctly presented key
messages in the main document, and accompanying information including the methodology published separately.
AEMO has conducted a review of the process used to both calculate reserve requirements and assess supply
adequacy in the ESOO. This has resulted in an improved modelling methodology for the 2013 ESOO. The new
methodology uses detailed time-sequential market simulations
1
rather than the higher-level deterministic approach
used in previous years. The time-sequential model performs optimised electricity dispatch for every hour in the
modelled horizon.
Further information on the time-sequential model itself (used for a range of AEMOs planning studies) is available in
the 2013 Planning Consultation Methodology and Input Assumptions document.
2

2 ESOO MODELLING
This section describes the 2013 ESOO modelling aims, inputs, and methodology.
2.1 Aims and scope
The ESOO assesses the adequacy of existing and committed supply to inform stakeholder decision-making. It
highlights opportunities for new generation and demand-side investments.
In 2013, assessing supply adequacy for the ESOO involved detailed computer modelling that simulated the
behaviour of the system at hourly resolution, including the following:
The availability of generation capacity accounting for planned and unplanned outages.
Demand side participation activity.
The impact network limitations and congestion.
The intermittent nature of wind and rooftop solar installations.
Electricity demand projections under both moderate and extreme weather conditions.
3

Simulation outputs are compared against the system reliability standard (explained below). The assessment is
conducted over a 10-year outlook period, with results presented on a regional basis.
2.1.1 The Reliability Standard
In the context of the National Electricity Market (NEM), reliability refers to the likelihood of having sufficient supply
to meet demand. It is measured in terms of accumulated unserved energy over time, and is expressed as a
percentage of the total energy requirement over the same timeframe.

1
The time-sequential model is implemented using the Prophet software from Intelligent Energy Systems.
2
AEMO. 2013 Planning Consultation Methodology and Input Assumptions. 12 J une 2013. Available:
http://www.aemo.com.au/Electricity/Planning/Related-Information/2013-Planning-Assumptions. Viewed 19 J une 2013.
3
Represented in the 2013 ESOO as 50% probability of exceedance (POE) and 10% POE demand conditions.
ESOO METHODOLOGY
2 ESOO Modelling AEMO 2013
The Reliability Standard
4
established by the Australian Energy Market Commissions (AEMC) Reliability Panel
defines the minimum acceptable level of reliability to be met in each region, and places a limit on the amount of
expected unserved energy. The NEM Reliability Standard states that, over the long term, the maximum expected
unserved energy in any region should not exceed 0.002% of the regions total annual energy consumption.
The low reserve condition (LRC) point indicates a year when unserved energy is projected to exceed the Reliability
Standard. An LRC point does not necessarily signify that load shedding will occur; however, continued operation
with a low reserve indicates the system may not meet the Reliability Standard over the long term.
2.1.2 Inter-regional reserve sharing
The LRC points are presented on a regional basis, but take into account the scope for reserve-sharing by
neighbouring regions since the modelling is conducted on a NEM-wide basis. The amount of capacity that can be
contributed between regions via interconnectors mainly depends on the demand diversity between regions,
network losses within regions, and transmission network limitations such as interconnector power transfer
capability.
Demand diversity is the extent to which demand varies between regions. For instance, if one region had a high
level of demand while a neighbouring region concurrently had a low level of demand, there would be a high level of
demand diversity. Reserve-sharing allows a regions supply-demand outlook to be optimised so that regions with
excess available capacity can support neighbouring regions that are unable to meet their reserve requirements
locally.
2.2 Inputs
Supply adequacy results are particularly sensitive to aspects of the power system that change over time - such as
demand diversity, the location and reliability of installed generation capacity, and significant transmission network
augmentations.
Figure 1 shows the key inputs to the supply-demand modelling. Inputs are updated as new information becomes
available.

4
Australian Energy Market Commission. Guidelines & Standards. Available: http://aemc.gov.au/Panels-and-Committees/Reliability-
Panel/Guidelines-and-standards.html. Viewed 4 J uly 2012.

AEMO 2013 ESOO Modelling 3
Figure 1 ESOO modell i ng inputs and outputs

Each of the inputs in Figure 1 is described in further detail as follows:
Define scenarios. AEMO undertakes scenario-based modelling in the ESOO, with each scenario
representing a narrative of how future environmental, political, and economic conditions may change. These
narratives are used to create detailed assumptions that govern the growth of demand over time. AEMO did
not update the planning scenario descriptions for the 2013 planning publications; they remain as per the 2012
scenario descriptions document.
5

Electricity demand forecasts. These are published in the National Electricity Forecasting Report (NEFR)
each year. Section 2.3.1 below provides detail on how demand is reflected in the ESOO modelling.
Develop load traces. See Section 2.3.1 and step one of the modelling methodology in Section 2.3 below.
Generator information survey. AEMO surveys generators each year to obtain the latest information on
generation forecasts, including information on the status of committed and proposed projects. The results
from this survey are summarised on the generator information page.
6

NEM constraints. A representative set of system normal network constraint equations for the NEM is
developed and input into the model to ensure system security.

5
AEMO. Available: http://www.aemo.com.au/Electricity/Planning/Related-
Information/~/media/Files/Other/planning/2012_Scenarios_Descriptions.ashx. Viewed 13 May 2013.
6
AEMO. Available: http://www.aemo.com.au/Electricity/Planning/Related-Information/Generation-Information. Accessed 13 May 2013.
Existing and committed projects
Supply-demand
modelling
Electricity demand
forecasts
NEM system
normal network
constraint
equations
ESOO Report
Define scenarios
Generator
information
survey
Develop load
traces
ESOO METHODOLOGY
4 ESOO Modelling AEMO 2013
2.3 Methodology
Figure 2 shows the steps of the ESOO modelling methodology using the time-sequential model.
Figure 2 ESOO modell i ng methodology flow-chart

The steps are further described as follows:
1. The annual energy and maximum demand forecasts are fitted to profiles to create demand traces for each
probability of exceedence (POE) studied. A detailed description of the trace development process used for
AEMOs planning studies is available from the 2013 Planning Assumptions webpage.
7

2. The time-sequential model is run over the 10 year outlook period reported in the ESOO. The output from the
model includes the regional unserved energy (USE), enabling assessment of the supplydemand balance.
3. The year in which the weighted unserved energy exceeds 0.002% is identified (see below for more
information on weightings). The financial year in which weighted USE equals or exceeds the 0.002% reliability
standard is the low reserve condition (LRC).
4. The gap between supply and demand results is progressively decreased until the resulting USE matches
0.002% of regional energy. The amount by which the gap was decreased represents the current reserve
deficit or an estimate of the additional capacity required to bring the system back within the Reliability
Standard.
Weighting
AEMOs time-sequential modelling used weighted 50% and 10% POE demand conditions to determine USE. The
following weights are applied to the USE:
30.4% for 10% POE.
69.6% for 50% POE.
See Section 4.1.3 of the 2013 Planning Consultation Methodology and Input Assumptions
8
document for further
information on deriving weighting factors.
2.3.1 Modelling and reporting demand in the ESOO
For consistency across planning publications, operational demand has been used in the 2013 ESOO unless
specified otherwise.
9
However, as a result of the demand trace development process
10
, adjustments are made to
the NEFR demand projections to align the demand forecasts with supply assumptions made in the modelling
process. This section details the components of the resultant demand used in the modelling and reported in the
2013 ESOO.

7
AEMO. Demand Trace Development for the 2012 National Transmission Network Development Plan, 12 J une 2013. Available:
http://www.aemo.com.au/Electricity/Planning/Related-Information/~/media/Files/Other/planning/Demand_Traces_Development.ashx. Viewed 15
J uly 2013.
8
AEMO. 2013 Planning Consultation Methodology and Input Assumptions. 12 J une 2012. Available:
http://www.aemo.com.au/Electricity/Planning/Related-Information/2013-Planning-Assumptions. Viewed 19 J une13.
9
For instance, as described in Section 3.2.1, the wind contribution to peak demand calculations used total demand, not operational demand. Where
operational demand has not been used, it has been specified.
10
See reference at note 7 for further detail.
(2) Run time
sequential
model over the
outlook period.
(4) Use results from
the year in which LRC
occurs to determine
reserve deficits.
(1) 10% and
50% POE
demand
trace.
(3) Identify the year
in which USE
exceeds 0.002% (the
LRC point).

AEMO 2013 Accompanying information 5
Modelled ESOO demand
The NEFR publishes a list of power stations used for operational and annual energy demand forecasts in each
state.
11
The list of generators used in operational demand for each region forms the basis of the generation and
demand modelled in the ESOO. Angaston is included in the South Australian generators as it is a significant non-
scheduled non-wind generator that has an impact on network constraint equations.
3 ACCOMPANYING INFORMATION
The accompanying information derived from the 2013 ESOO modelling that is published on AEMOs website
includes:
The Prophet model database.
The constraint workbook.
A series of data files containing the modelling results.
The Prophet model database, containing a representation of all the input assumptions, is made available to
stakeholders for use in modelling or as reference material.
The constraint equations modelled in the ESOO are published alongside the Prophet database in Excel format for
use by stakeholders in other modelling tools. AEMO continues to update and refine constraints through its
modelling projects throughout the year, and welcomes feedback to incorporate into future studies where possible.
A glossary of terms used throughout the ESOO and its accompanying information is available from the ESOO
website.
12

The following section describes the modelling results data files in more detail.
3.1 Modelling results
As stated in Section 1, the format of the 2013 ESOO is shorter then previous reports to highlight key messages. As
a result, the 2013 ESOO has accompanying spreadsheets presenting further modelling results for stakeholders.
These spreadsheets also contain additional information made available by the new modelling methodology.
Five spreadsheets accompany the ESOO; one for each NEM region. Each spreadsheet contains the following
figures and underlying data for each of the three economic growth scenarios (high, medium, and low).
The chart shown in Section 4 of the ESOO for each region, which shows (and provides data for):
Yearly 10% and 50% POE maximum demand.
The percentage of USE against the 0.002% reliability standard.
The maximum firm generation capacity (see Section 3.1.1 for further detail).
Any LRC points within the outlook period.
Section 3.1.1 provides a guide to interpreting this chart. Note that for 2013, few LRC points were identified
within the 10-year outlook period for most regions, so they may not be visible in the output.
A supplydemand chart for the region presenting monthly energy modelling output in MWh of the following
parameters:

11
See Appendix E of the NEFR Methodology Information Paper. AEMO. Available:
http://www.aemo.com.au/Electricity/Planning/Forecasting/National-Electricity-Forecasting-Report-2013/NEFR-Supplementary-Information-2013.
Viewed 1 August 2013.
12
ESOO Abbreviations, Glossary, and List of Company Names. AEMO. Available: http://www.aemo.com.au/Electricity/Planning/Electricity-
Statement-of-Opportunities.
ESOO METHODOLOGY
6 Accompanying information AEMO 2013
Energy demand.
Generation by type (coal, hydro, gas, wind, other).
Import/export, where exports are shown below the x-axis, but equal to the additional energy generated
within the region above the demand required.
Energy pumped to storage (where applicable), which represents the energy required to pump water for
hydro generation.
A supplydemand chart for the region presenting monthly modelling output in MW of the following parameters
against a weighted 10% POE and 50% POE maximum demand (see Section 2.3):
Weighted maximum demand.
Import at weighted maximum demand.
Export at weighted maximum demand.
Unmet load at weighted maximum demand (USE).
Generation.
An import/export chart depicting the total imports and exports from the region for each year.
3.1.1 Interpreting the ESOO adequacy chart
Figure 3 shows an example adequacy chart provided for each NEM region in the main ESOO report. This chart
summarises the results from the supplydemand modelling relevant to supply adequacy for that region over the
10-year outlook period. In particular, it highlights any USE for that region compared to the Reliability Standard as
described in Section 2.1.1, which enables the LRC point (if any) to be derived. As there is a high level of supply
adequacy across the NEM to meet demand in both the medium and low scenarios, many of the charts in the 2013
ESOO do not have an LRC point.
Of note, the maximum firm generation capacity figure shown only includes firm wind generation capacity for peak
demand. For instance, if a regions scheduled and semi-scheduled generation capacity is 4,000 MW (excluding
wind generation), there is 400 MW of additional installed wind capacity and an assumed wind contribution to peak
demand of 7%
13
, the maximum firm generation capacity represented in the chart would be:
4,000 +(400 x wind contribution to peak demand (7%)) =4,028 MW.
There are times when the modelled wind output exceeds these firm generation capacities, and is therefore able to
contribute more towards total energy production than towards meeting peak demands. The extent to which this is
the case can be observed from the supplydemand chart (and underlying data) provided for each region presenting
monthly energy modelling output.

13
See Section 3.2.1 for further information on the methodology for developing the wind contribution to peak demand.

AEMO 2013 Accompanying information 7
Figure 3 Exampl e ESOO adequacy chart

Projected USE tends to grow exponentially after it appears, particularly if demand is growing. To ensure the charts
focus on the key information relevant to supply adequacy, USE presentation beyond LRC points has been
truncated. This information is still available in the underlying data set.
3.2 NEM Historical Market Information report
The NEM Historical Market Information report
14
is a component of the ESOO document suite and publishes
historical demand, generation, inter-regional power flows, regional spot prices, inter-regional settlements residue
and wind contribution to peak demand. Some methodological information in relation to the wind contribution to
peak demand is included here as these figures are used across various components of the 2013 ESOO and other
publications.
3.2.1 Wind contribution to peak demand
The wind contribution to peak demand presented in the NEM Historical Market Information report is analysed for
each region using historical generation data obtained from AEMOs systems. The analysis commences from the
time at which each wind farm was fully installed and started transmitting energy to the NEM.

14
Available: http://www.aemo.com.au/Electricity/Planning/Electricity-Statement-of-Opportunities.
0
0.001
0.002
0.003
0.004
0.005
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1314 1415 1516 1617 1718 1819 1920 2021 2122 2223
%

U
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a
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/
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(
M
W
)
Financial year
USE (%) 10% POE maximum demand (MW)
Maximum firm generation capacity (MW) 50% POE maximum demand (MW)
Reliability standard (%) LRC Point
LRC point - represents the first
year that the projected USE
exceeds the reliability standard.
Maximumfirmgenerationcapacity -
the forecast installed capacity where
wind generation is only represented as
its contribution to peak demand.
AEMC reliability standard - '...the
maximum expected unserved energy
in any region should not exceed
0.002% of the regions total annual
energy consumption'.
10% & 50% POE maximumdemand -
the modelled annual demand
projections.
ESOO METHODOLOGY
8 Accompanying information AEMO 2013
The top 10% of seasonal demand periods for each region is selected; summer refers to the period 1 November to
31 March, and winter refers to the period 1 J une to 31 August for all regions.15 The Tasmanian wind contribution
to peak demand was recognised to have unique qualities among the regions, given that generators tend to respond
to combined Tasmanian and Victorian demand, via Basslink (the VictoriaTasmania interconnector). For this
reason, wind contribution in Tasmania was measured during the top 10% of the combined Tasmanian and
Victorian demand periods.
Non-scheduled wind farms in the NEM are generally treated as negative load elements when recording demand.
This means that non-scheduled generators lower the total demand in the region by the amount of electricity they
generate. To adjust for this and ensure that the total demand figures reflect actual demand levels, the total for each
non-scheduled wind farm is added to the corresponding regional demand. For the abovementioned periods, the
wind output as a percentage of the installed capacity for each region is then calculated and used to produce a
frequency analysis.
The wind contribution factor is taken at the 85% confidence level. That is, giving a percentage of installed capacity
that can be expected to generate during high demand periods 85% of the time.
For 2013, contribution factors over the past five years (only four years of data was included for NSW to ensure the
data used was representative of the current generation conditions) were then averaged.
The Queensland region was not studied as there was insufficient wind farm data available.
3.3 Changes from 2012
The 2012 and 2013 ESOOs have employed different methodologies to determine the adequacy of supply. The
2012 ESOO use a supplydemand calculator, and the 2013 ESOO used the time-sequential modelling approach
described in this document. Testing and external auditing was conducted to ensure the new methodology was
accurate. Overall, the new methodology achieves the following:
Provides more comprehensive results in terms of the value and amount of information for stakeholders.
Increases the quality and accuracy of the LRC points.
Increases the consistency between the ESOO supply adequacy assessment and other AEMO planning
studies (for example, the network support constraint ancillary service (NSCAS), minimum reserve level
calculation, the National Transmission Network Development Plan (NTNDP) and Victorian Annual Planning
Report (VAPR)).


15
The standard definition of summer for Tasmania for the ESOO and electricity planning is usually 1 December to 28 February. See ESOO glossary
on the ESOO webpage. Available: http://www.aemo.com.au/Electricity/Planning/Electricity-Statement-of-Opportunities.

AEMO 2013 Important Notice D1
IMPORTANT NOTICE
Purpose
The purpose of this publication is to provide technical, market data and information regarding opportunities in the
National Electricity Market.
AEMO publishes the Electricity Statement of Opportunities in accordance with clause 3.13.3(q) of the National
Electricity Rules (Rules). This publication has been prepared by AEMO using information available at 7 J une 2013,
unless otherwise specified. Information made available after 7 J une 2013 may have been included in this
publication where practical.
Discl aimer
AEMO has made every effort to ensure the quality of the information in this publication but cannot guarantee that
information, forecasts and assumptions are accurate, complete or appropriate for your circumstances. This
publication does not include all of the information that an investor, participant or potential participant in the National
Electricity Market might require, and does not amount to a recommendation of any investment.
Anyone proposing to use the information in this publication (including information and reports from third parties)
should independently verify and check its accuracy, completeness and suitability for purpose, and obtain
independent and specific advice from appropriate experts.
Accordingly, to the maximum extent permitted by law, AEMO and its officers, employees and consultants involved
in the preparation of this publication:
make no representation or warranty, express or implied, as to the currency, accuracy, reliability or
completeness of the information in this publication; and
are not liable (whether by reason of negligence or otherwise) for any statements, opinions, information or
other matters contained in or derived from this publication, or any omissions from it, or in respect of a persons
use of the information in this publication.
Acknowledgement
AEMO acknowledges the support, co-operation and contribution of all participants in providing data and information
used in this publication.
Copyright
2013 Australian Energy Market Operator Limited. The material in this publication may be used in accordance
with the copyright permissions on AEMOs website.


ESOO METHODOLOGY
D2 Important Notice AEMO 2013

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