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New rules create major road hump for wind and solar projects

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The construction boom in large-scale solar farms and wind projects in Australia appears to have hit a significant road hump, with new rules imposed by the Australian Energy Market Operator causing delays, and in some cases adding costs and technology reviews, for project developers.

The issue is causing controversy because the rules changes have not yet been endorsed by the market rule-maker, but AEMO is insisting they be respected because of the sheer number and scale of the projects under construction, and because of their anticipated life-span and their role on the grid.

The changes are part of a suite of actions proposed by AEMO in response to last September’s “System Black” in South Australia. But the biggest impact for solar and wind farms appears to be around the refined definition and requirement for “continuous uninterrupted” power.

This standard – known as S5.2.5.4 – is being reinforced so as to require wind and solar farms to maintain the same level of output in the face of any big changes in frequency and voltage. No exceptions.

The industry accepts that the new ruling is a good thing – and overall should not add significantly to the costs of projects if taken into account at the planning stage. But the controversy arises because some projects that have already begun construction or planning are being told that they have to meet these new standards.

“The number of connection applications  … is an order of magnitude greater than ever before,” AEMO says in its request for a rule change in August. “As generating systems are long life assets, there is a need to ensure that the capabilities they are built with today will meet the needs of the power system of the future.”

The easiest way to meet this requirement with solar farms is to “oversize” the number of inverters attached to the installation – giving it the extra capacity to respond to voltage to ensure it can maintain output. Or, like wind farms, it could add capacitors to the installation.

This is expected to be a significant impediment on the 21,000MW of wind and solar plants that AEMO says have been proposed, but it is having an impact on a number of projects that have already won approval in the current investment boom, but which are now facing tighter rules.

Some project developers are looking at upgrading equipment, such as inverters, while others are looking at changing other machinery or even changing their output assumptions, creating potential problems between developers and contractors. Some are said to be challenging AEMO’s ability to impose such rules.

No project developer would go on the record because of the “sensitive” nature of the agreements, but according to RenewEconomy’s enquiries, around 20 projects that previously had initial approval – or believed they had – have been told they would have to modify their projects if they are to be registered.

Among those affected are many of the large-scale solar projects that won funding from the Australian Renewable Energy Agency’s large-scale solar tender, and many other large-scale wind and solar projects: the new rules apply to those above 30MW.

The one exception to that limit is the small the Lakeland solar and battery storage project, which will be notable for being the first large-scale grid connected solar farm paired with battery storage, with 10.4MW of solar and 5.4MWh of battery storage.

But it needs to meet the standard because it wants to be a scheduled generator. Its commencement date has already been delayed several months (it was hoping to be up and running in June) because of the need to meet the continuous uninterrupted power rule and it is still waiting for final connection approval.

Another complication is that the AEMO requirements are not necessarily the same as those of the local network operator .

“There is an inherent tension between the obligation to comply with what the network wants, and what AEMO wants,” said one project manager who declined to be named.

“AEMO is focused on active power and wants enough megawatts to meet its supply needs, while networks are worried mostly about voltage and frequency, that’s where they are held to account.

“My observation is that none of this stuff is bad – it is just demanding that solar plants do a little more than they have been doing. It’s a technical issue and relatively easy to manage if you do it up front.”

However, the issue arose in those projects where contracts had already been signed. “The challenge is trying to retrofit this sort of design parameter in a contract that is already costed and has reached financial close.”

Another project manager, who also declined to be named, said increasing the number of inverters, for instance, by 10 per cent may only add 1 per cent to overall costs. He said some developers were putting their hopes in a new upgraded inverter – SMA’s 2.75 model – that has yet to be released.

“The biggest problem is the way that it is being implemented,” he said. “It has been introduced retrospectively and some projects are having to redesign their system because of it.”

In principal, the rules have been welcomed. “What AEMO is demanding is a transition in the solar sector from being the lower cost to the highest value plants, so it can inject the right amount of energy at the right time with the highest quality,” said one.

But others suggest that these standards are higher than what is being applied to fossil fuel generators, which would struggle to match the performance requirements of the inverter-based technologies.

“There wouldn’t be a synchronous generator that can do that,” said a third project manager in reference to response times of 30 milliseconds.

AEMO says in its rule application to the AEMC that the new rules have not been imposed on existing generators, although it is looking at whether it should do this.

It is also planning to decide by mid next-year what to do about “governor controls” on large coal and gas plants, which have been relaxed by many plant operators and some see as the biggest weakness in Australia’s grid – and may have played a greater role in the S.A. blackout than is generally acknowledged.

This project manager also questioned whether the new rules imposed by AEMO had any force, given they have yet to be approved by the Australian Energy Market Commission. “Legally, I don’t think they have a leg to stand on,” he said.

The new rules were submitted by AEMO to the AEMC as a proposed rule change just one month ago. They can be found here, and the detail in the appendix from page 61.  

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  • George Michaelson

    I don’t personally have a problem with this. The capital investment difference is there, sure. The financial backers would be mad to walk, given the stage of development and sunk cost. So, pony up, meet spec, and move on. These things have a long lifetime, and behaving like a 2 year ROI was coming is silly.

    We get this every year with budget night. Do they announce as of now? As of last night? as of three months time? three years? This is not unusual.

  • solarguy

    What about batteries doing the job, kill 3 birds with 1 stone. Makes sense to me!

  • Peter F

    It seems that it is a bit of a speed hump but not a brick wall. The + side is that more reliable you make renewables the less need there is for FF spinning reserves and the less money they can make from FCAS markets.

    In other words after an initial bump this move could actually accelerate the transition.

    I believe that the industry hasn’t quite worked out the 30msec response of batteries, but in the unlikely event that that problem can’t be solved synchronous converters will solve it

  • Ray Miller

    The AEMO to AEMC rule change proposal should joint the list and only be processed AFTER the 5min rule is fully implemented and operational!
    I would be concerned by the risk to the RE industry by changing goal posts, especially as it is a result of lazy and incompetent engineering in the past. Yes I know AEMO is playing catch up but they have to come clean and acknowledge previous failings and admit to the government their engineering and management was substandard.
    Consequences of the technical standard changes and project delays will/may have a significant impact on the NEM reliability and prices, especially in the coming summers this year and next.
    If they want to implement retrospective technical requirements it needs to be applied to ALL.

    • George Darroch

      You have a point. They’re imposing standards on this side, but refuse to budge on the 5 minute rule which would greatly improve the operation of the entire system.

      (Make it a 2 minute rule and then see who squirms!)

  • Cooma Doug

    I dont believe this is a hurdle too high for renewable energy. It is a positive and money spent empowering these load shifting concepts will increase the effective value of RE. Market recognition of modern clean solutions and a balanced market valuation based on reliability is a huge plus for all. It will empower the Snowy 2 concept.

    The Snowy 2 plan is a winner and this market progress is towards its utilisation. It will not add one watt hour of energy to the system but is the platform for load shifting and value appreciation of solar especially. Load shifting coal via storage will not be a viable product. It would be the dirtiest energy we could muster.

  • DJR96

    In the vast majority of cases all that will be needed is a software update in the inverters being used. And given the numbers being used, the manufacturers will be bending over backwards to help out and get it done.

    However, it does highlight a double standard. When legacy generation wouldn’t have a hope of performing some of these characteristics.

    But we’re also getting to the point where renewables and inverters were just a tolerated supplement to the network to now being a significant factor in the network. Where we currently rely on the legacy units to form the network, we’ll have to adapt to relying on inverter technologies to form the network instead. It is something that will have to be done in time. But is anyone actually planning for it? I can envisage a wholly reformed network that does, it’s entirely technologically possible.

  • Decentralised systems for rural areas would not need to be on a grid – as long as there is sunshine and storage and inverter – direct DC connections, the system works. Get rid of the grid in the country – waste of power, maintenance. I have been off grid for thirty years, and the costs are low, the reliability designed in at 100%. Therefore, the rules are not applicable. But- Australians have become a timid and lazy people.

  • Radbug

    I really do like magnesium/pyrite batteries. So cheap, so good!

  • George Darroch

    Fair’s fair: apply these rules to the big spinning coal and gas burners. Then we’ll see who’s competitive.

  • Al C

    Slight correction: the S5.2.5.4 access standard requirements for maintaining MW output that have caused a fair bit of strife were not actually changed, and are not part of the proposed rule changes in front of the AEMC.
    AEMO has simply started advising that the existing “continuous uninterrupted operation” clause includes this requirement. As this is not a rule change, it does not need to be approved by the AEMC. And it applies to all generators, including those already under construction, or even generating, with signed connection agreements.

    • neroden

      As noted, none of the fossil fuel generators meet this NEW requirement, and AEMO is not even trying to require that they meet it.

      Claiming that the requirement was always there is nonsense, and frankly dishonest. It’s new.

  • Miles Harding

    It would be reasonable for existing renewable generators that have been compromised by the AEMO to expect to be compensated for their expenses in complying, or the AEMO should not make these changes retrospectively.

    It is not reasonable to expect that renewable power plants (or any power plant, for that matter) should be able to perform in the ‘Ideal’ manner that AEMO seems to think is reasonable.
    Principally, my reason for thinking that the AEMO are a bunch of idiots on this occasion is that the resources needed, for the most part, will not be be co-located in an efficient and resillient system.

    For example, batteries should be located near the load centres to reduce lossy transmission peaks and absorb local solar output, whereas wind is located where it’s windy (and there are no nimbys) and solar where it’s sunny, increasingly immediately ajacent the loads. Longer term storage comonents such as pumped hydro, CST, biomass etc must be where geography and resources permit.

    It’s not the job of the generators to ensure the network is appropriate or reliable, it’s the job of policy with appropriate targets, signals and incentives, something the LNP government is demonstrably unable to accomplish.

    As a post note, this policy appears to be the work of the coal trolls, which if they get their wish, will likely cause their own demise as the more flexible storage in wind and solar farms out-competes the dinosaurs. (yeah!)

  • neroden

    This is just sabotage. Attempting to *retrospectively* force *already approved* projects to comply with *not yet issued* rules is just not normal behavior: the only way to look at it is sabotage.

    If it were a going-forward rule, apparently everyone would be happy with it, which makes the added sabotage element all the more bizarre and obvious.

  • Scott Partlin-Solar

    AEMO can change rules as much as they think is necessary to ensure system stability is not compromised, that’s their role. And we want them to make sure that the requirements are robust so that if there are any future system outages, it won’t be because renewables didn’t cut it (as some on the political divide like to falsely assert)

    But the reality of technology is such that, the more often they make changes only seals the ultimate success of renewables. That’s because, like all new technology, the ability to adapt, change and be modified to meet a changing landscape of rules is far easier compared to older generation forms.

    The SC2750 mentioned in the article is one example. Almost the same devices as a 2.5MW inverter, but with some changes and a bit of development. All in less than 6 months. SMA is now even looking to provide the ability to upgrade 2.5MW inverters already in the field to 2.75MW inverters. And it’s specifically to address this clause to allow developers to have their plants rated at the original designed capacity rather than the downgraded capacities they’re now stuck with after the goal posts have been moved.

    Can’t see the same sort of thing being possible with a mechanical gas or coal generator.

    Don’t be too concerned. The tide of renewables is coming in, and the fossil fuel generator castles will never be able to withstand in the long term…

  • Greg Hudson

    Do FF (coal) power stations have to adhere to this ‘uninterrupted’ rule ?
    If not, then solar should not need to either IMO.