The Electricity Authority (the Authority) has found that intermittent generation forecasts are often inaccurate and unreliable until close to real time. Inaccurate forecasting is prevalent because there are minimal obligations around the accuracy of intermittent generation forecasts.
Intermittent generators have few incentives to forecast accurately, as there's little correlation between forecasting accuracy and revenue earned in the spot market.
The Authority estimates the share of supply from intermittent generation will increase from around 6% of total generation today to 47% by 2050. In the shorter term, 78% of the projects that could be completed by 2025 are solar projects, with wind projects accounting for most of the remaining generation potential. As such, it's an appropriate time to review the forecasting arrangements for intermittent generators.
The Authority invited feedback on their issues and options paper on this topic, 'Review of forecasting provisions for intermittent generators in the spot market'. Submissions to this consultation closed on 26 July 2023.
We recommended the Authority:
- adopt a centralised arrangement where a service provider is responsible for forecasting the likely intermittent generation quantities available
- introduce accuracy standards. These would require intermittent generators to submit a revised offer to the system operator if the total MW specified in an offer exceeds or falls short of the total MW that the centralised arrangement has forecast, for a generator where the generator may not meet the forecast:
- at T-12 hours, a P50 forecast should be /- 10% from actual generation at real time, and
- at T-3 hours this should be narrowed to /- 1MW.
- introduce penalties for non-compliance with the prescribed standards.
- undertake a consultation on the structure and suitability of the system that integrates the issues the Authority has treated as discreet in previous consultations.