Examining Victoria’s recent wind drought

This ‘Chart of the week’ examines the recent spell of low wind generation in Victoria and associated elevated prices.

Previously, ‘Chart of the week’ issue 78 highlights the risk of wind droughts within the National Electricity Market (NEM) due to the high correlation of wind fronts both within states and in neighbouring jurisdictions. Victoria is identified as most vulnerable due to its low insolation levels, high degree of correlation of wind and relatively high demand. In addition, with the current high utilisation of gas for heating, any push towards electrification of appliances would further increase demand for electricity during the winter months.

Figure 1 shows the half-hourly generation by technology within Victoria over the second week of July 2021 (6 July to 13 July) against Victoria’s 30-minute spot price.

Minimal wind generation is observed from 6 July to 10 July, with the Victorian wind farms averaging a capacity factor of 7% over this period. From 6 July – 9 July, prices reflected this wind shortage in averaging $240 over this four-day period, and the cap price hit numerous times, with only one brown coal unit (LYA4) being unavailable over this period (Unit 3 of Yallourn did experience an outage from the period of 10 July to 11 July). As the wind returned, prices then averaged

$65/MWh from 11to 13 July, indicating how wind is increasingly important in influencing the price setting in Victoria. When the wind and variable renewable energy (VRE) is high, market prices tend to be comparatively low; however, during periods of low VRE, we see market prices increase rapidly.

Fast forward another 20 to 30 years when all brown coal is retired. This brief snapshot highlights how essential it is not to have all the eggs in the wind basket. Good interconnection, adequate solar resources, dispatchable technology and deep or seasonal storage, is absolutely essential for Victorian’s transition to a net zero emissions state.