The University of Melbourne Renewable Energy Integration Laboratory (MUREIL) simulates the National Electricity Market (NEM) to address whether the market will be able to cope with increasing renewable penetration.
The Energy System Modelling Initiative has produced several modelling approaches to simulate the National Electricity Market and to address the question of whether the market, as it currently stands, will be able to cope with increasing renewable penetration.
In order to optimise for the least cost transition from current infrastructure to low carbon energy systems, linear programming and genetic algorithm approaches have been employed. Results suggest that wind power, solar photovoltaic and solar thermal will dominate the energy system, with some limited fossil fuel use to keep costs within reason. Across the models, neither nuclear power or carbon capture and storage come out as winners against the less expensive renewable technologies. Papers detailing these results are to be released in mid 2015.
The lab carries out energy market simulations using the output from the linear programming method and a Monte Carlo approach with Carnot Game Theory. Results show that increased market volatility would make for a difficult investment environment, and that the financial incentives to actually build a high penetration renewable energy system would be low.
Results suggest that a shift to a capacity market would provide more stability, but would favour technologies with dispatchable generation. A second paper proposes that the key to facilitating more renewables is to create a more advanced market with shorter dispatch intervals and "gate closure" (the time before dispatch that bids needs to be locked in) would improve market accessibility for renewables.