Reduction of Synergy Generation Capacity

Capacity Market

Jun 14
Reduction of Synergy Generation Capacity

In May 2017, the new Minister for Energy, Mr Ben Wyatt, announced that Synergy would close the following units by October 2018:

  • Muja AB (240 MW)
  • Mungarra gas turbines (113 MW)
  • West Kalgoorlie gas turbines (62MW)
  • Kwinana gas turbine (21MW)

In total, these closures represent 436 MW of nameplate capacity and 387 MW of capacity credits, all of which will be withdrawn from the market for the 2018/19 capacity credit year onwards.

For the capacity credit market, the closures will help bring the market closer to balance from the oversupply situation experienced in recent years. The combined impact of these closures and the recent withdrawal of demand side management capacity will see a restoration of balance in the capacity credit market from 2018/19 with a predicted oversupply of just under 200 MW or about 4% of the projected reserve capacity target of 4,616 MW.

The earlier return to a balance of supply and demand in the capacity market may lead to capacity prices being higher than previously anticipated. If the mandatory capacity credit auction mechanism is introduced as previously flagged by the Electricity Market Review programme, the first auction may also be held earlier than anticipated in response to the new, more balanced position in the capacity market.