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CAEEPR’s members are energy companies, government agencies and policy makers who actively guide the research agenda and input into the assumptions used in modelling policy positions. Access to world-class journal articles and their authors promotes implementation of CAEEPR’s applied research to its network of industry and government, and deeper understanding of the implications of policy changes and decarbonisation pathways.

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Solving for ‘y’: demand shocks from Australia’s gas turbine fleet

Paul Simshauser and Joel Gilmore

The long run task of Australian power system planners is to identify the structural adjustment pathway associated with retiring the National Electricity Market (NEM) coal fleet. System planning models seek to do this at minimum cost subject to a reliability constraint. This involves the deployment of low-cost intermittent wind and solar resources with a mix of dispatchable, flexible, ‘firming’ assets.

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On the 3-Party Covenant Financing of ‘Semi-Regulated’ Pumped Hydro Assets

Paul Simshauser and Nicholas Gohdes

All credible scenarios of a decarbonising Australian power system with high levels of renewables rely on a portfolio of flexible, dispatchable storage and firming assets. Given our current understanding of costs and prices, such portfolios are thought to include shortduration batteries, intermediate-duration pumped hydro, with gas turbines providing the last line of defence.

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Economics of renewable hydrogen production using wind and solar energy: A case study for Queensland, Australia

Mostafa Rezaei, Alexandr Akimov, Evan MacA. Gray

This study presents a technoeconomic analysis of renewables-based hydrogen production in Queensland, Australia under Optimistic, Reference and Pessimistic scenarios to address uncertainty in cost predictions. The goal of the work was to ascertain if the target fam-gate cost of AUD 3/kg (approx. USD 2/kg) could be reached.

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Papers by Year

2024 Papers

Title	Author(s)	Description
Solving for ‘y’: demand shocks from Australia’s gas turbine fleet	Paul Simshauser and Joel Gilmore	The long run task of Australian power system planners is to identify the structural adjustment pathway associated with retiring the National Electricity Market (NEM) coal fleet. System planning models seek to do this at minimum cost subject to a reliability constraint. This involves the deployment of low-cost intermittent wind and solar resources with a mix of dispatchable, flexible, ‘firming’ assets.
On the 3-Party Covenant Financing of ‘Semi-Regulated’ Pumped Hydro Assets	Paul Simshauser and Nicholas Gohdes	All credible scenarios of a decarbonising Australian power system with high levels of renewables rely on a portfolio of flexible, dispatchable storage and firming assets. Given our current understanding of costs and prices, such portfolios are thought to include shortduration batteries, intermediate-duration pumped hydro, with gas turbines providing the last line of defence.
Draft-2024-ISP-Consultation-Submission	Andrew Fletcher and Huyen Nguyen	This submission to the Draft 2024 ISP Consultation is informed by the CAEEPR techno-economic research that assesses the cost of Queensland green hydrogen and green ammonia energy infrastructure options in collaboration with the University of Oxford's Oxford Green Ammonia Technology research group. A submission to the 2024 Forecasting Assumptions Update Consultation has been made on the 9th of February 2024.
Forecasting-Assumptions-Update-Consultation-Submission	Andrew Fletcher and Huyen Nguyen	This submission to the 2024 Forecasting Assumptions Update Consultation is informed by the CAEEPR techno-economic research that assesses the cost of Queensland green hydrogen and green ammonia energy infrastructure options in collaboration with the University of Oxford's Oxford Green Ammonia Technology research group.
Economics of renewable hydrogen production using wind and solar energy: A case study for Queensland, Australia	Mostafa Rezaei, Alexandr Akimov, Evan MacA. Gray	This study presents a technoeconomic analysis of renewables-based hydrogen production in Queensland, Australia under Optimistic, Reference and Pessimistic scenarios to address uncertainty in cost predictions. The goal of the work was to ascertain if the target fam-gate cost of AUD 3/kg (approx. USD 2/kg) could be reached.

2023 Papers

Title	Author(s)	Description
Electricity contract design and wholesale market outcomes in Australia’s National Electricity Market	Tim Nelson, Stephanie Easton, Lewis Wand, Joel Gilmore and Tahlia Nolan	The emergence of variable renewable energy (VRE) technologies has created a range of different energy contracting techniques. Within Australia’s National Electricity Market (NEM), Run-of-Plant (RoP) Power Purchase Agreements (PPAs) became the most common form of contract with purchasers of wind and solar energy agreeing to pay a fixed price for energy irrespective of when it is produced and therefore its actual value to the market.
Queensland green ammonia value chain: Decarbonising hard-to-abate sectors and the NEM - Main report	Andrew Fletcher, Huyen Nguyen, Nicholas Salmon, Nancy Spencer, Phillip Wild and Rene Bañares-Alcántara	Fossil fuel-based ammonia production currently accounts for around 1% of global greenhouse gas emissions. Ammonia is one of the few hydrogen use cases where no real alternatives exist. Green ammonia could play a pivotal role in decarbonising fertilisers and explosives, that are critical inputs into Australia’s agriculture and resources sectors respectively.
Queensland green ammonia value chain: Decarbonising hard-to-abate sectors and the NEM - Information sheets	Andrew Fletcher, Huyen Nguyen, Nicholas Salmon, Nancy Spencer, Phillip Wild and Rene Bañares-Alcántara	This report assesses the design of infrastructure required for a world-scale Queensland green ammonia industry (multiple 1mtpa NH3 capacity plants) with value chain costs estimated for supplying (a) green hydrogen and (b) green ammonia, to meet variable and fixed customer demand profiles
Contracts-for-Difference: An assessment of social equity considerations in the renewable energy transition	Tim Nelson, Tracey Dodd	This research advances knowledge regarding social equity as it relates to electricity network charges, renewable investments, and household income. While much research has examined social equity issues related to electricity access, research has yet to fully explore how different network tariff designs used to recover the cost of renewable energy investments, such as those related to ‘Contracts-for-Difference’ (CfDs), impact low-income individuals.
Effective policy to achieve the Australian Government’s commitment to 82% renewable energy by 2030	Tim Nelson, Tahlia Nolan and Joel Gilmore	Australian climate change policy has been fraught for at least two decades. Around a decade ago, Nelson et al (2010) estimated that carbon policy uncertainty would result in electricity prices being $8.60 per MWh higher than necessary. Sadly, the study significantly underestimated both the policy gyrations that would occur and the associated costs.
Unhedged risk in hybrid energy markets: Optimising the revenue mix of Australian Solar	Nicholas Gohdes	Australia is facing a historic investment challenge, with an estimated $1.2 to $1.5 trillion in newly invested capital required by 2030 in order to meet 2050 decarbonisation targets. In response policy makers have begun “re-entering” energy markets, which were deregulated and privatised in the 1990’s.
Non-Firm vs. Priority Access: on the Long Run Average and Marginal Cost of Renewables in Australia	Paul Simshauser, David Newbery	Australia’s National Electricity Market (NEM) has experienced a rapid expansion of Variable Renewable Electricity (VRE) projects, not without obstacles. Entry frictions such as movements in Marginal Loss Factors and/or network congestion adversely impacted ~15% of new projects. Are these the expected results in a workably functioning market, or due to market design defects?
On Static vs. Dynamic Line Ratings in Renewable Energy Zones	Paul Simshauser	Scaling-up Variable Renewable Energy will face critical bottlenecks vis-a-vis requisite transmission hosting capacity. Network developments must navigate the complexity of encroaching on private land, risk disturbing sites of cultural significance, compete with other environmental (i.e. biodiversity) objectives, and endure backlash from directly affected communities.
On the impact of targeted and universal electricity concessions policy on fuel poverty in the NEM’s Queensland region	Paul Simshauser, Wendy Miller	In Australia’s National Electricity Market (NEM), households have faced markedly higher electricity prices following the 2022 war in Ukraine and subsequent energy crisis. Forward prices for coal and gas increased sharply, trading at multiples of historic averages.While initially sheltered to wholesale price shocks through regulatory lag, retail electricity tariffs rose by more than 30% for the 2024 financial year
Leveraging Data Portals as Analytic Platforms: A Case Study of a Simulation of the Queensland Energy and Jobs Plan	William Paul Bell, Nancy Spencer	This paper discusses how researchers can augment their traditional publications and share their large research datasets in a format easily analysed by other researchers, while enhancing their own analytic capabilities. The case study is the Queensland Energy and Jobs Plan, and the data portal implemented using Power BI.
Renewable Hydrogen requirements and impacts for network balancing	Phillip Wild, Lucas Skoufa, Nancy Spencer	Hydrogen is the gas of the moment: an abundant element that can be created using renewable energy, transported in gaseous or liquid form, and offering the ability to provide energy with only water vapour as an emission. Hydrogen can also be used in a fuel blend in electricity generation gas turbines providing a low carbon option for providing the peak electricity to cover high demand and firming.
Derivatives and Hedging Practices in the Australian National Electricity Market	Jonty Flottmann, Phillip Wild, Neda Todorova	This article expands on the seminal policy work by Anderson et al. (2007) and explores the impacts of a changing energy mix on derivatives and hedging practices 15 years on from their work in the Australian National Electricity Market (NEM). The Australian electricity market has undergone vast change since 2007 as increasing amounts of variable renewable energy (VRE) has entered the market.
Locational and market value of Renewable Energy Zones in Queensland	Paul McDonald	Efficient coordination in transmission planning and locating variable renewable energy (VRE) generation is important in transitioning to a low carbon electricity system. Renewable Energy Zones (REZ) provide an opportunity to strategically augment and expand the existing transmission network to maximise use the available renewable resources.
The regulation of electricity transmission in Australia’s National Electricity Market: user charges, investment and access	Paul Simshauser	The Australian Electricity Supply Industry was dominated by state-owned, vertically integrated monopoly utilities through to the 1990s reform era. It was during these reforms that electricity transmission networks were structurally separated from generation (i.e. vertical restructuring).
Rooftop solar PV, coal plant inflexibility and the minimum load problem	Paul Simshauser and Phillip Wild	The feasibility of dispatch under ever-expanding rooftop solar PV resources is examined in the NEM’s Queensland region with minimal demand elasticity. Resolution requires Australia’s energy-only market to navigate inflexible coal plant exit, and flexible battery and gas turbine plant entry.
Renewable investments in hybridised energy markets: optimising the CfD-merchant revenue mix	Nicholas Gohdes Paul Simshauser Clevo Wilson	Energy markets were designed to maximise productive, allocative and dynamic efficiency. Although renewables have become the dominant investment in deregulated energy markets, decarbonisation may not proceed at a pace consistent with the aspirations of policymakers.
Contract design for storage in hybrid electricity markets	Farhad Billimoria and Paul Simshauser	By establishing six principles for government-initiated contracting and examining the incentive compatibility of storage contract designs, it is found that structural simplicity in contract design could introduce incentive incompatibility.
The 2022 Energy Crisis: horizontal and vertical impacts of policy interventions in Australia’s National Electricity Market	Paul Simshauser	Price increases before- and after- policy interventions are analysed. The Queensland Government hardship policy remains vitally important making a 3.2 percentage point impact on underlying level of energy poverty.

2022 Papers

Title	Author(s)	Description
The role of gas price in wholesale electricity price outcomes in the Australian National Electricity Market	Tahlia Nolan, Joel Gilmore, and Jack Munro	Will the correlation between gas and electricity prices in the NEM continue under the current extreme commodity prices and the transition to a net-zero emissions grid?
Economies of scale and (the lack of) consolidations in the Swedish electricity distribution market	Magnus Söderberg & Mattias Vesterberg	Economies of scales are expected in natural monopoly markets. Extending this concept in application to the Swedish electricity distribution market highlights that DSOs could reduce their costs substantially.
Quantifying the risk of renewable energy droughts in Australia’s National Electricity Market (NEM) using MERRA-2 weather data	Joel Gilmore, Tim Nelson, and Tahlia Nolan	What is the real-time instantaneous and medium term production risk in the NEM supplied solely by VRE?
The sunshine state: cause and effects of mass rooftop solar PV take-up rates in Queensland	Paul Simshauser, Tim Nelson and Joel Gilmore	The cause and effects of the rapid take-up of behind-the-meter rooftop solar PV by Queensland households indicate participating households are benefitting, while hidden costs remain for non-participants. Impacts on utilities are mixed, with retail supply businesses most adversely affected.
Dividends Regulated	Paul Simshauser	An analysis of the dividend policy and market valuations of the listed regulated utilities in the context of a falling
The Levelised Cost of Frequency Control Ancillary Services in Australia’s National Electricity Market	Joel Gilmore, Tahlia Nolan and Paul Simshauser	The paper develops an approach for quantifying long run equilibrium prices in the markets for Frequency Control Ancillary Services (FCAS), with the intended application being to guide the suitability of utility-scale battery investments under conditions of uncertainty and missing forward FCAS markets.
VRE Revenue Quality	Nicholas Gohdes and Paul Simshauser	Under conditions of policy uncertainty in NEM, higher credit quality drives higher gearing, and lower expected returns to equity resulting in higher post-construction VRE plant valuations demonstrating the repackaging and reallocation of risk.
Network Regulation under Electoral Competition	Anke Leroux and Magnus Söderberg	Modern regulatory approaches are criticised for their apparent failure to achieve competitive pricing and for not including customers voices. By extending well-known regulatory laboratory experiments, electoral competition, when implemented jointly with incentive regulation, can push prices down quicker to the welfare maximising level.

2021 Papers

Title	Author(s)	Description
Regularized Conditional Estimators of Unit Inefficiency in Stochastic Frontier Analysis, with Application to Swedish Electricity Distribution Market	Zangin Zeebari, Kristofer Månsson, Pär Sjölander, and Magnus Söderberg	The value of Stochastic Frontier Analysis (SFA) increases when the level of accuracy at which it estimates unit-specific inefficiencies improves. Based on Swedish electricity distribution data, conventional conditional estimators and regularized conditional estimators provide substantially different results for highly inefficient companies.
Australian household adoption of solar photovoltaics: A comparative study of hardship and non-hardship customers	Tim Nelson and Tracey Dodd	This work proposes a new organizational and financial structure to account for the net present value of installing solar PV systems for low-income tenants to reduce annual grid-based electricity consumption and lower greenhouse emissions.
Rooftop solar PV and the peak load problem in the NEM’s Queensland region	Paul Simshauser	In this article the partial equilibrium framework is used to define conventional plant ‘dis-investment’ in the presence of rising rooftop solar PV and utility-scale renewables but requires frictionless coal plant divestment and bounded negative price offers.
Optimising VRE plant capacity in Renewable Energy Zones	Paul Simshauser, Farhad Billimoria & Craig Rogers	Examines the development of Renewable Energy Zones (REZ) as a means to guide forward market commitments and produce greater coordination between generation and transmission plant investments, exploring various definitions of a ‘fully subscribed REZ’ in Southern Queensland.
What’s next for the Renewable Energy Target– resolving Australia’s integration of energy and climate change policy?	Tim Nelson, Tahlia Nolan and Joel Gilmore	Outlines the issues associated the Commonwealth Renewable Energy Target (RET), reviewing its effectiveness as an emissions reduction tool and driver of electricity sector abatement and proposes a new approach.
Vulnerable households and fuel poverty: policy targeting efficiency in Australia’s National Electricity Market	Paul Simshauser	Queensland’s longstanding customer hardship policy pre-dates the National Electricity Market and is refined using pre-existing (means-tested) welfare mechanisms to target low income households, while holding the budget constraint constant.
Renewable Energy Zones in Australia’s National Electricity Market	Paul Simshauser	Renewable Energy Zones (REZ) are examined through both i). a consumer-funded regulatory model and ii). a renewable generator-funded market model. A ‘super-sized concessional mezzanine’ facility is presented as a critical element of REZ capital funding as a means to optimise market-based REZ transmission augmentation and moderate sponsor risks of transient underutilisation.

2020 Papers

Title	Author(s)	Description
Is the NEM broken? Policy discontinuity and the 2017-2020 investment megacycle	Paul Simshauser and Joel Gilmore	Analysis of recent NEM performance finds all pressing issues relate to real-time power system security, not Resource Adequacy, and reflect a Rate of Change problem stemming from record levels of simultaneous (asynchronous) new entry.
Merchant utilities and boundaries of the firm: vertical integration in energy-only markets	Paul Simshauser	Questioning the suitability of the energy-only market design, investments in a stand-alone generator, a stand-alone energy retailer and a merged entity are simulated over 16 years of trade under both project finance and corporate financing structures with a focus on credit metrics.
Overcoming the limitations of variable renewable production subsidies as a means of decarbonising electricity markets	Tim Nelson, Alan Rai, Ryan Esplin and Tom Walker	While production subsidies for VRE plant are the most prevalent policy intervention in Australia, two adjustments to production subsidies and their resulting impacts are examined to correct for unintended consequences
Merchant renewables and the valuation of peaking plant in energy-only markets	Paul Simshauser	With merchant renewables a new asset class, a merchant gas turbine, merchant wind, and an integrated portfolio comprising both plants are valued in Australia’s National Electricity Market South Australian region.

2019 Papers

Title	Author(s)	Description
Australia’s National Electricity Market after twenty years	Alan Rai and Tim Nelson	The deficiencies in cost recovery mechanisms and doubling in price increases have disproportionately affected low-income customers. To rectify this, the paper proposes three key reforms: integrating emissions reduction and energy policies; measures to boost network capacity utilisation; and improvements to cost recovery mechanisms.
Trials and tribulations of market responses to climate change: Insight through the transformation of the Australian electricity market	Tim Nelson & Tracey Dodd	The transition to renewables is shown to be impeded by regulators and institutional decisions using the closure of an aging coal-fired power station as an example.
Lessons from Australia’s National Electricity Market 1998-2018: strengths and weaknesses of the reform experience	Paul Simshauser	Australia’s National Electricity Market (NEM) commenced in 1998 as an energy-only wholesale market and accompanying forward markets without policies relating to climate change, natural gas and plant exits. Piecemeal interventions and network policy failures in the mid-2000s with regulatory and business inertia meant network tariffs didn’t stabilise until 2015, resulting in rising prices conflated with price discrimination.
The impacts of regulated pricing on price dispersion in Australia’s retail electricity markets	Ryan Esplin, Ben Davis, Alan Rai & Tim Nelson	Modelling demonstrates that a price cap leads to the withdrawal of the lowest priced offers from the market, in effect reducing the benefits available to customers that ‘shop around’ and are best addressed through non-price regulation policy options.
On the impact of government-initiated CfD’s in Australia’s National Electricity Market	Paul Simshauser	Using the NEM’s South Australia region it is found government-initiated CfDs have a targeted role to play in energy markets by correcting market failure; but broad-based market mechanisms are preferred.

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