Wind power could see ‘significant growth’ in UK and Australia

Wind is set to become a dominant source of power in the UK and Australia as governments look to reduce their carbon emissions, according to new research.

The insight report claims that both markets will see growth, while also highlighting that the characteristics of the British market means it will see more significant progress than Australia, with price cannibalisation a consequential risk, particularly for subsidy-free wind.

The report, Wind in the Australian and Great British energy markets, examines whether the outlook for wind in both the Australian and UK markets are being shaped by market design and infrastructure.

The research also asserts that there are good opportunities for wind in Australia if obstacles relating to volatile drivers of revenue can be navigated and addressed.

Gareth Miller, CEO of Cornwall Insight, believes that wind will play different roles in the future of both the Australian and GB energy markets, with GB likely to see a much greater expansion of its already extensive wind capacity base.

“This is as a result of the abundance of this natural resource and the mandatory need to act created by the net zero commitment,” he said.

“However, Australia also presents significant opportunities for wind developers, particularly in certain regions, and building off a strong initial foundation built under subsidy schemes.”

The paper states that the GB wind market has some distinct advantages over its Australian counterpart, including no equivalent risks around changes to network loss factors for investors to deal with, greater network resilience, and system services already beginning to explore the value wind can bring to delivering a smart, low carbon and flexible system.

Meanwhile, according to Cornwall Insight, Australia, has the difficult challenge of loss factors to contend with. System operators have also been directing thermal plant to meet system needs of wind variability, even if such plants are out of the money, which has the potential to distort energy-only markets. Wind is also often being built at the periphery of a less resilient network not always as well interconnected as it could be, the research claims.

“The common themes that link the two countries are significant growth in wind capacity and output, and the challenges and opportunities this creates in terms of integration with markets originally designed around centrally connected, thermal power stations,” adds Miller.

“In both markets, investment flows will rely on trying to predict volatile and largely uncontrollable revenue influencers, either in the form of power prices themselves, or regulatory factors that can influence a wind projects ability to capture them.

“Successful players in both GB and Australia will have common characteristics – firstly, deploying strong quantitative estimation of future cash flows and secondly, an ability to discern and link up the most significant changes emerging from detailed and dynamically changing policies and regulations.”

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