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AEMO‘s Zibelman wants to rid energy market of “super peaks”

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The new chief executive of the Australian Energy Market Operator, Audrey Zibelman, says she wants to get rid of the “super peaks” that have been a feature of the energy market for the past few decades, and proposes to use rooftop solar and storage to help achieve this.

In further confirmation of the radical change in the energy industry that she is is keen to embrace, Zibelman says the grid can be both smarter and faster, and cheaper and more reliable, by embracing “distributed” generation.

“We can make the system more efficient by using these advanced technologies (solar and storage and smart software) and by making sure we use the system so we don’t have these super peaks,” Zibelman said in a interview on ABC radio.

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Zibelman says the key is making sure that the services offered by homes and households for their rooftop solar and battery storage has a financial incentive to help the grid.

“What if someone has put in a battery, has rooftop solar, and they are willing to help manage the grid, and to get paid for it … so rather than get paid to build a new generator, just in case we need it, we can’t shift their loads of their peaks and get paid for that.

She uses the example of New York, another high-price energy state, which after Hurricane Sandy looked to distributed generation as the answer to grid security and reliability, and lower costs.

In Brooklyn, for instance, a solar-based microgrid – with batteries and thermostats – was built that avoided the construction of a big and expensive new sub-station, and saved millions of dollars.

The utility went out and sought couple of 100MWs of capacity – and came up with some innovative solutions –

“We now have this  micro grid of solar and storage, including some low-income housing, it’s not just about rich people putting solar on their rooftops – and created a community of interest … and become part of urban planning.”

She says Australia’s is also pursing such schemes as part of “proof of concept” exercises, but she wants it integrated soon into the National Electricity Market.

Such ideas have been doing the circuit of the energy industry for some time, particularly since the blackout in South Australia after their major storm in September last year.

The significance of Zibelman’s remarks, however, is that this is the first time the head of the one of the three big institutions that controls Australia’s energy market is talking this way.

Networks have said this, even big retailers have said this, and so have any numbers of solar and battery storage companies, along with many independent experts, but not someone in such a key position.

Of course, Zibelman does not set the rules, that is the role of the much-criticised Australian Energy Markets Commission. But she fully intends to make her views known.

She does not appear to be the least bit phased by the toxic political debate over energy policies in Australia either, or the attachment of the incumbent utilities to their current business models.

The interesting bit is her view that some of the excess capacity carried in Australia, and she seems to be alluding to generation and network, is all but redundant, or should be.

“When we built the grid in the last century we built it around the fact that at the time the most efficient way to build and manage the grid was around centralised coal and gas plants – on the assumption that demand did not respond to price.

“Because of that, electricity cannot be stored. So had to build power plants just to sit there, just in case it was a hot day.”

Those peaks, accompanied by soaring electricity prices caused when those machines have been switched on, have underpinned the business model of the fossil fuel generators, because it has delivered windfall revenue .

Around one third of their annual revenue came in just 30 hours of peak supply, and generators have been using their ability to shape the market to extract higher prices over longer periods in the last 6 to 12 months.

“We can’t simply drive our system by looking in the rear view mirror,” Zibelmain says.

“AEMO’s role is a very clear role, we have a job to ensure energy security for all Australians.

“As a not-for-profit we don’t have a particular interest in saying this is going to be better for us, what we are focused on is what is better for consumers.”

Zibelman describes it as an issue of “sound economics” – people are putting solar in the roof because it makes economic sense to them it not an issue of politics  ut an issue of sound economics.

“What we are seeing is that the cost of renewable and the cost of storage continues to drop … it becomes not just an environmental choice but an economic choice.

“What we can do in Australia is to recognise that we can help drive value by really working with consumer representative to use these resources better. and that’s what I am passionate about.

“It is not a political issue – we all want the same thing … people want the lights to stay on.”

The interview with Saturday Extra’s Geraldine Doogue is worth a listen. You can find it here.

 

   

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  • Ray Miller

    The supper peak issue is complex and made up of a range of entrenched and perverse goals in the past. Mike Stanford writing in the Conversation shows a number of graphs with the changing temperature sensitivity of the grid loads coupled with the accepted daily peaks. While we do need to change our thinking on the many options we have for using the newer technologies to better manage the grid peaks e.g. coordinated distributed battery storage,solar and demand management, we need to seriously address areas of energy efficiency.
    For crying out loud it is still very common practice to have small electric hot water storage units on normal supply and contributing to daily peaks. Addressing this area would reap considerable savings, we just need to transfer some of the savings from the grid to point of use. Surely we can come up with a model to make this happen.

    Our built environment is our laggard here, while we have been focusing on bling and costs, its energy performance has almost been totally ignored for its threat, and cost to the grid. The built environment’s thermodynamic performance and relationship to energy demand is exponential. As we have measured with each passing record summer the problem to the grid and cost to the end users are getting worse and with zero attempt to address the route cause of the temperature sensitivity.
    Building more thermally efficient and comfortable buildings is achievable but we may need to change our thinking and economic models to achieve a better outcome, but as the political stalemate continues I do not hold much hope for rational thought and science.

  • velocite

    A reasonable commentary – but what has it got to do with AEMO? What part of AEMO’s brief enables it to affect any of this? Does Zibelman understand what AEMO’s role is, or is she putting in a bid to extend it?

    • before she arrived, aemo had already put in a submission to finkel pleading for more powers to adapt rules to changing technologies, arguing that AEMC was so locked in last century it was hampering its ability to access the tools it needed to keep the grid stable.

      • velocite

        As an ignorant punter watching what appears to be a planning vacuum I think that might be a good thing, but I’m by no means certain. It looks to me as though, at present, no-one at the highest level has planning responsibility for the national grid. Is it supposed to be the Chief Scientist? What resources does he have for the purpose? Did he prepare a plan incorporating adding more pumped hydro storage to the Snowy?

        • Chris Fraser

          I suspect the real power is with the AEMC, which advises and takes direction from the Ministerial Council on Energy, a committee of COAG. They will also be advised by Finkel & Co. If State Ministers agree on rule changes, this will filter down to AEMC and AEMO.

          • davidb98

            good… the state ministers should drive energy management because they are the ones that control building and maintenance of the infrastructure
            federal government can play with money and PR but has no real responsibility for doing anything

            pity there are some Lib governments that just want to use Australia to accumulate their own wealth because they all think they can leave and live somewhere else if it gets uncomfortable here

          • velocite

            It all sounds like a bad story to me. From my armchair it seems clear that if our national grid is to be transformed through the replacement of fossil fuel powered generators with intermittent renewables we’ll need associated storage, lots of it, to ensure we can match demand with supply. I seriously doubt that we can leave this transformation in the hands of a market, however we tweak it. There should be a standing department with substantial technical resources to take ownership of making sure it happens. And doesn’t it need to be national, given the importance of interstate transmission?

          • Chris Fraser

            I’m not sure if interconnectors are Ministerial Council-led or grow organically through economic opportunities. Probably the latter. Anyhow, clearly a price on carbon (not a hated tax) could have helped the transition. Unfortunately it was political poison then and still is right about now.

        • Alastair Leith

          Yeah we need an energy Czar and a entire agency to plan it, not a propagandist for gas and coal minister in charge at State or Federal level.

  • Phil

    Stating the known obvious here.

    Why would you want to solve a problem when you can maintain the current spectacular failures of supply with predatory business models creating obscene profits?

    Can’t see any traction happening with these ideas in an electricity supply that is a market business model

    Maybe more suited to another country where Electricity is considered an essential service , like Singapore.

  • Alastair Leith

    Interesting that with Government owned Synergy owning most of the generation in WA the SWIS has never seen a bid much over $200/MWh in the last two FYs and an average of $50/MWh for last full year (currently at $54/MWh). c.f. SA where ceiling of $14,000 gets hit with regularity…and one of those grids is an island the other has interlinks!