https://itkservices3.com/posts.html Electricity markets analysis quarto-1.6.39 Fri, 04 Sep 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/batteries_ppa.html I think we can now definitively say that some coal generation is doomed. Once 19 GW and 55 GWh of utility batteries are operating in the market, coal profits will be eviscerated. Drought may restrict hydro supply, particularly in Tasmania; wind may drop off; heat may lift demand — but even with all of that going their way, spot market revenue for coal generators will be down the toilet. It will be for gas as well of course but gas is basically designed to be turned off and on. Coal can’t do that, and carries $100s of millions of fixed cost. Storage Generation https://itkservices3.com/posts/batteries_ppa.html Fri, 04 Sep 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/Safeguards2.html In this note I set out a case and the implications of linking electricity and safeguards. In my view the linkage would: Policy Markets https://itkservices3.com/posts/Safeguards2.html Wed, 19 Aug 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/Nicks.html There is a lot of news flow this week: Markets Generation https://itkservices3.com/posts/Nicks.html Wed, 12 Aug 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/site_updates.html At least for a while I’ve expanded my research analysis to include articles about AI economics and finance as well as data centres. These now have their own home on itkservices3.com under “AI economics”, and their own email list. <strong>If you want them, <a href="https://itkservices3.com/mailchimp.html">update your preferences</a> and tick “AI and datacentre economics”</strong> — or use the <em>update your preferences</em> link at the foot of this email. If you’d rather not, do nothing: the research articles carry on unchanged. Demand https://itkservices3.com/posts/site_updates.html Sun, 09 Aug 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/China_coal_update.html China can still develop new coal under A$100/t, but only from the shallow Ordos rung, and that rung has about 25 years left at current output. Everything below it is deeper, more remote, lower rank or smaller, usually several at once. Capacity under construction will hold the price down for a few years while the resource behind it gets worse. I expect underlying returns to fall unless the coal price rises in which case substitution happens faster. In the very end producing close to 5 bt a year of coal in one country means shifting production from one region to another region raising costs and will end badly. Other regions round the world, Wales, Spain, Germany, Virginia have also see coal production die away with large social impacts, often 100s of thousands of people have to retool. China can put that off by reinventing coal but it can’t hide. Increasing production brings the end faster , but for the world the challenge is the increasingly severe outlook for global warming. China’s coal production and burning, and I repeat this later will be responsible for about 14% of global climate changing emissions between 2026 and 2040, maybe a touch less. It remains a variable we should all focus on. Global Investment https://itkservices3.com/posts/China_coal_update.html Wed, 05 Aug 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/CIS_mods.html The CIS has not worked. But the capacity it was designed to procure is needed more than ever, and the cost of delay rises every year. Policy Investment https://itkservices3.com/posts/CIS_mods.html Wed, 29 Jul 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/distributors.html The overall message from this review is that electrification has helped to maintain network residential revenue even though all the consumer consumption growth has come from solar. See Figure&nbsp;5. Non residential volumes are flat despite population growth Figure&nbsp;6. Networks with datacentres do show volume growth. The shift to home batteries will keep the pressure on network volumes and therefore on the regulator to allow price rises. The AEMC seeks to change this with a shift to fixed pricing. I’m not sure how successful that shift will be. As with locational marginal pricing, community views about AEMC policy do count. Networks Policy https://itkservices3.com/posts/distributors.html Sun, 26 Jul 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/DieselPolicy.html Interested parties need to formalise their approach to develop policy and solutions for EV trucks. There are many excellent reasons to do so: economics, national interest, and plain old keeping up. There is lots to do and not much time. If we do it right there will be jobs, lower costs, a happier, healthier, safer and less polluting trucking industry. Australia can replace $40 bn of net imports ($60 bn gross) — the equivalent on the trade balance of our gas export industry. EVs Policy https://itkservices3.com/posts/DieselPolicy.html Sun, 28 Jun 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/Batteries_morecoming.html This note serves to make two points: Storage Generation https://itkservices3.com/posts/Batteries_morecoming.html Sat, 06 Jun 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/Post_coal_prices.html TL;DR Markets Generation https://itkservices3.com/posts/Post_coal_prices.html Sun, 31 May 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/Whats happening down the hood.html Most subscribers to my research distribution list know me from the writing, but a lot has been built around it — a forecasting model, a dashboard, an iPhone app, market summary emails, SMS alerts. Most of it is free. This is a quick tour. Markets https://itkservices3.com/posts/Whats happening down the hood.html Mon, 18 May 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/data_centre_backup.html Continuing my look at the data centre industry this note observes: Demand Networks https://itkservices3.com/posts/data_centre_backup.html Wed, 13 May 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/the-spot-mirage.html Prices are too low to support either new generation or old generation. There is no investment signal. As a result, once the current 4 GW is built out, there will be a two year gap before any more supply other than rooftop solar hits the market. Markets Policy https://itkservices3.com/posts/the-spot-mirage.html Wed, 06 May 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/Diesel_symptom.html One of the most interesting points to emerge from the security, cost and decarbonisation issues with diesel is a realisation that Australia’s coal production has likely passed its peak. Generation Investment https://itkservices3.com/posts/Diesel_symptom.html Mon, 27 Apr 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/Twiggy.html Fortescue has taken a number of expensive “space cadet” wrong directions in its decarbonisation journey, principally around hydrogen. But on a reasonable set of numbers Pilbara electrification and in particular electrification of diesel trucks looks like it could deliver a close to 16% pretax IRR. ITK expects the Chinese suppliers will price well below normal — it’s a big market and Fortescue can serve as the showcase project. So I’ve used two sets of capex numbers. Some very, very low numbers implied from the most recent Fortescue press release and some more, but not necessarily sufficiently, conservative numbers. It’s the conservative numbers in the headline table. Our estimated savings are at the top end of the range mentioned by FMG but essentially consistent. For a desktop study it’s a reasonable result. More due diligence would no doubt result in more conservative estimates. Generation Investment https://itkservices3.com/posts/Twiggy.html Sun, 12 Apr 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/In the year 2026.html Coal generation share has fallen below 50% and evening peak prices are well down, but without new wind FIDs in NSW the machine will grind to a halt. Markets Generation https://itkservices3.com/posts/In the year 2026.html Wed, 08 Apr 2026 14:00:00 GMT David Leitch https://itkservices3.com/posts/Freight_forward.html I attended the Smart Energy/Boundless Freight Forwarding conference in the great hall at Parliament House yesterday. The audience was about 80% male. Policy Climate https://itkservices3.com/posts/Freight_forward.html Mon, 30 Mar 2026 13:00:00 GMT David Leitch https://itkservices3.com/posts/Diesel_to_electricity.html Full electrification of Australia’s diesel fleet would redirect approximately $22 billion per year from petroleum imports to domestically produced electricity — equivalent to roughly 1% of GDP in import substitution. The associated CO2 reduction of 90 Mt (~15% of national emissions) represents a further welfare gain not captured in national accounts. At $176/t CO2, the AER shadow price represents around $15 bn in welfare gains. For scale, the NDIS costs roughly $45 bn per year. EVs Policy https://itkservices3.com/posts/Diesel_to_electricity.html Sat, 21 Mar 2026 13:00:00 GMT David Leitch https://itkservices3.com/posts/Futures_jump.html My conclusion is that a rise in gas prices domestically — as international prices feed through — will lead to an increase in NSW spot electricity prices compared to pre-war expectations. But the extent will likely be minor if NSW coal continues to perform. Last year Mt Piper had a poor autumn. Markets https://itkservices3.com/posts/Futures_jump.html Thu, 12 Mar 2026 13:00:00 GMT