Emissions and prices are anti-correlated in Australia: what this means for the decarbonisation of our grid

Recent work has shown that energy storage operating in a CO₂ intensive grid can increase greenhouse gas (GHG) emissions. In this paper we sought to characterise the emissions of Australia's electricity grid to inform the planning and operation of energy storage with the goal of minimising emissions associated with energy storage and supporting the rapid decarbonisation of Australia's energy system.

To do so, a marginal emissions factor (MEF), representative of the emissions intensity of the marginal generator (the generator with the highest bid price) in each time period, was calculated for the Australian National Electricity Market (NEM) across 2018 for each of the five NEM regions, SA, NSW, VIC, QLD, and TAS. Through analysis, significant variation was discovered in the MEF's intra-day variability, with high MEF values occurring overnight and during times of lower demand, and low MEF values occurring during the day during times of peak demand. Compared against the average 30-minute spot price across the day, a strong anti-correlation was calculated between the MEF and the spot price.

Using these results, the importance of energy storage operated to minimise both costs and emissions was highlighted. By taking the key finding of its anti-correlation with price, the MEF can be simply implemented in the real world, including through dynamic carbon incentives and market tariffs, to ensure emissions are being reduced both in the short-term and long-term. In doing so, this paper's findings can be used to ensure optimum energy storage operation for emissions reductions is not disadvantaged in an energy market operating under least cost dispatch. The authors of this paper suggest these findings be used in further work modelling how energy storage will operate under different cost and emission reduction objectives, dynamic carbon incentives, and market tariffs.