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S.A. puts energy security target on back-burner after AEMO steps in

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Premier Jay Weatherill and Energy Minister Tom Koutsantonis announcing their electricity plan. Photo: Tony Lewis/InDaily

South Australia has abandoned plans to have its state-based energy security target in place this summer after conceding is could have little impact given the new initiatives by the Australian Energy Market Operator and the lack of competition in the local grid.

Officially, South Australia has decided to “defer” the start date of the EST until 2020, having already deferred it from a July 1 start to a January 1, 2018 start. But given the state poll in 2018, and the new initiatives taking place in the broader market, it seems unlikely to ever see the light of day.

The EST was a key component of the $550 million Energy Security Plan the S.A, government unveiled earlier this year following its dismay at the forced load shedding in February and other incidents.

But it seems likely that the only two components to have a lasting impact will be the Tesla big battery, which is due to come into service on December 1, and the 150MW solar tower and molten salt storage facility in Port Augusta, which will contract to supply the government’s own electricity needs.

The government has also committed to an emergency gas plant, and will install emergency generators this summer and next, but has kept its options open about the future. These may not be needed if demand management initiatives and other schemes take effect.

The EST was to be one of the centerpieces of the plan, aiming to ensure that 50 per cent of demand was met by S.A.-based “dispatchable” generation by 2025.

The original structure of the EST was harshly criticised because it was thought it would favour gas plants over battery storage, would not reduce prices and could end up as a $3.5 billion subsidy to the gas industry.

But it appears to have been made redundant by AEMO’s decision – explained here – to require that at least three gas generators operate at all times, and more if the wind output from the state’s wind farms is more than 1200MW.

That guarantees the presence of gas-fired generation, but it also means that because three gas units are generating at the same time, and therefore sets the price, the chances of a reduction in wholesale prices are effectively removed.

renewable graph.

The impact of the curtailment was made evident last week, when the wind output ran at a steady 1200MW for three days, with no significant fall in prices – apart from when the link to Victoria was constrained – because gas generators had to continue generating.

The S.A. government says that modelling from Frontier Economics, one of the architects of the EST, indicates that if the scheme was to lower power prices it requires the operation of a more competitive energy market.

It suggests that may not occur till 2020, when the solar tower and storage facility, and new facilities supported by the $150 million Renewable Technology Fund are built.

“Since we announced the EST a number of changes in the National Electricity Market have delivered system security outcomes similar to those the EST would seek to achieve,” energy minister Tom Koutsantonis said, noting also AGL’s decision to invest in a new gas generator and the implementation of 49 out of 50 Finkel recommendations.

Dan Spencer, from Repower Port Augusta, says the delay is good news for consumers and prevents what would have been a subsidy to SA’s existing gas generators being paid by consumers over the next few years.
“The Energy Security Target should now be dropped all together and replaced by planned reverse auctions for renewable energy with storage,” Spencer said,
“Reverse auctions have already delivered South Australia’s world leading solar thermal plant with storage & the world’s biggest battery. Expanding a program of reverse auctions for renewables with storage will secure a cleaner, cheaper and more reliable energy system for SA than the now delayed Energy Security Target ever could.”

  

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  • Joe

    So, gas is locked in for the immediate future. I keep reading that it is gas that is driving energy prices. So then, it seems that there is no foreseeable relief from rising energy prices.

    • trackdaze

      Plenty, its called behind the meter solar and battery.

      • Joe

        Yes, that I well understand which can reduce total energy bills. But if gas is the price driver then the tariff rates charged by the Energy Majors will also keep driving upwards.The daily supply charges and energy tariff rates look locked in for continual rises.

        • trackdaze

          Its role will reduce with the 2GW of Large scale renewables broadening its base and the 1GW of behind the meter solar installed this year alone.

        • Richard

          If you want to increase renewables plus storage at the fastest possible rate, then this is the way to do it. It also reduces the possibility that the LIbs and their corrupt fossil supporters will crash the system again and blame it on renewables.
          They are smart up at AEMO.

  • Tom

    Surely the Tesla big battery could substitute itself for at least 1 gas generator, given that 70MW of synthetic inertia is as powerful as 700MW of real inertia.

    Steam is a gas (well, if it’s supercritical it is, otherwise technically it’s a vapour), but Port Augusta CST surely must count as another gas generator. That’s 2.

    Why doesn’t the SA government buy a couple of Tassie’s 40MW OCGTs that we never use (we’ve got 3 of them, but we only ever seem to use our 58MW OCGT or our 208MW CCGT). That would be 3 and 4. Bonza!

    • BushAxe

      Batteries need to prove themselves to AEMO first. The Aurora CST won’t be completed until 2020 which by then I’d expect SA will have significantly more storage installed.

    • Rod

      “Why doesn’t the SA government buy a couple of Tassie’s 40MW OCGTs that we never use”

      We are leasing 9 of these https://www.gepower.com/gas/gas-turbines/lm2500
      Initially to run on diesel (as back up) and if we keep them, will be run on gas in the next year or so.

    • Mike Westerman

      Tom I’m not sure where you got the 70MW of synthetic inertia is as powerful as 700MW of real inertia. Synthetic inertia just means automatic controls on the right type of machine can respond very fast to minimise frequency decay, but the limits are still the reserve these machines have before they max out or slow down. Furthermore, as AEMO has shown in its studies, at the 100ms point after a perturbation, systems cannot detect whether the decay is a fault being cleared or a decay that could result in detachment, so are recommending at least enough real inertia on the system to provide a 250ms window for a 2Hz/s decay.

      The annoying thing is that real inertia could be provided using large synchronous machines of any type – a generator disconnected from its gas turbine would do, and we know SA has some that are not reliable with the turbines connected!

    • Sir Pete o Possums Reek

      Because we don’t want to cause another drought in Tassie 🙂
      Murphy has eyes everywhere and rust never sleeps.

  • Rob Bussey

    Are you for real? “forced load shedding in February and other incidents” Name the incidents so we all know..

    • Ken Fabian

      Rob, you could type “load shedding February” into the space at the top of your browser and name them yourself.

  • Craig Allen

    Ironically, because gas continues to push up the electricity price renewables will be more profitable than otherwise, so that presumably will encourage more to be built, This will mean that the generation profile above will occur a greater proportion of the time. Sooner of later surely someone is going to find a use for all the excess that is being curtailed.

    • Mike Westerman

      Hopefully it will bring forward electrification of transport which uses at the moment as much energy as the power sector while incurring a $35B trade deficit.

      • Tom

        +1

    • TheTransition

      That’s not clear. If you’re wind farm you’re producing max power at the same time as all the other wind farms in SA. You may be the one chosen for curtailment, in which case you get $0 for your power right when you’re producing your maximum output.

      • Craig Allen

        Begs the question: how do they choose which farms get curtailed?

      • solarguy

        Storage in the correct proportion should correct that for the most part.

    • Alastair Leith

      Ironically because normally when the gas is flowing the wind isn’t blowing, so wind farms miss the high prices (although they maybe be missing due to their PPAs anyhow). But now the AEMO regulation inverts the ‘market dynamics’. Tell me why we have a National Energy Market again?

      • solarguy

        Errrr…… to make everything run smoothly LOL.