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Winds of change: Victoria and its unique afternoon ‘belly bump’

To say the transition is well and truly underway in the Australian NEM is not exactly news. In the last year alone, renewables have delivered record shares in generation mix across the NEM. Whilst solar is the technology often in the news given its impact on both operational demand, mid-day prices and grid supply, wind however, has been significantly influencing market trends through the day.

In this ‘Chart of the week’, via a time-of-day analysis, we take a close look at wind in Victoria and the unique impact it has been having on generation mix in the state. We discuss what makes wind such an exceptional renewable source in Victoria and the broader impacts this could have on the market.

As shown in Figure 1, in the last four years, wind contribution to the generation mix in Victoria has grown quite significantly. On average, across the entire day in 2020, wind delivered 14% of the generation mix in the state; doubling its output from 7% in 2017. This phenomenal growth in output has significantly displaced gas. In the evenings (5PM – 11.30PM) – outside solar hours – gas contributed 5% to gen mix in the state in 2020, whilst wind made up 14%. For the same time-of-day period in 2017, wind was 6% against gas at 9%.

Whilst the displacement of gas by wind at nighttime is not particularly surprising, the shape of wind output in Victoria displays a unique characteristic; an afternoon ‘belly bump’. As seen in Table 1, Victoria is the only state to not only show this remarkable shape, but to also have wind contribute more to gen mix in the afternoons (14%) than in the morning time (13%). In addition, the overnight average wind contribution to gen mix in the state (15%) was only 1pp higher than the afternoon contribution (14%). Overall, wind in Victoria – specifically from western Victoria – has the most complementary market impact to solar in the NEM; making renewables in Victoria particularly impactful.

This outstanding shape has also made wind in Victoria not only play a vital role in replacing the afternoon contribution (23%) from the retired Hazelwood power station, but also further impacting thermal generation. In 2017, gas and wind equally contributed an average of 8% to the gen mix in the afternoon. Fast forward to 2020, gas has dropped to 3% whilst wind has increased its afternoon share to 14%.

These unique trends have fundamental impacts across the broader market through time-of-day pricing, constraints, and arbitrage value through the day. More on this in our power price insights and trends webinar on Friday.