Modelling the Electricity and Natural Gas Sectors for the Future Grid: Developing Co-Optimisation Platforms for Market Redesign

This report provides detail on the modelling and scenario frameworks for the economic analysis of the Future Grid. These frameworks and modelling platforms have been constructed to support the Future Grid Cluster in examining policy and market issues which will affect the electricity and natural gas markets in Australia. Initially we provide an overview of the co-optimisation and expansion of transmission networks and electricity generation for the future grid. In this section we outline not only the key mechanisms and analyses required, but also how we have and will continue to collaborate with the other projects within the Future Grid Cluster. In section 3 we provide an extensive analysis of the electricity market modelling platform PLEXOS. This section will outline, not only the mechanistic components of modelling electricity markets, but also some of the assumptions which are required to examine issues such as generation investment under uncertainty. The following section is a discussion of the natural gas modelling platform ATESHGAH. This model has been in construction for several years prior to the commencement of the Future Grid Cluster and represents a significant shift in gas market modelling methodology for Australia, compared to previous approaches. This model is capable of examining multiple issues associated with policy, market, economic, and physical aspects of gas production, transmission, sale and liquefied natural gas (LNG) export simultaneously. We have used this model to examine how Australia’s eastern gas market could be affected by the commencement of LNG exports from Curtis Island in 2015/16. In the remaining section, we present the scenario modelling framework as an overview and present some initial results for Scenario 1: Set and Forget. These results represent the first set of simulations and should thus be viewed as an initial attempt to undertake the large search space that the four scenarios evaluated in the Future Grid Forum encompass.