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S.A. to rethink energy security target after deleting battery storage

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The South Australia government is expected to rethink the draft legislation of its planned energy security target after being told its current design will end up simply providing a multi-billion dollar subsidy to gas, and will do nothing to lower prices for consumers or increase energy security.

The draft legislation for the energy security target was released earlier this month, and as we reported then its decision to grant incentives only to “real inertia” appeared to effectively rule out battery storage, and put a question mark over future wind and solar developments in the state.

Energy minister Tom Koutsantonis has been told that if the draft is not changed, the legislation would effectively put a cap on renewables, raise the cost of wholesale electricity and likely fail to deliver any more energy security.

AER market share geneation capacityThe only thing it would deliver, critics say, is a $3.5 billion subsidy to the owners of state’s gas generators, the very people who have caused prices to jump because of the rising cost of gas, and what the Australian Energy regulator notes is the “region’s relatively concentrated generator ownership …. and (their) bidding behaviour.”

South Australia says it wants to ensure that 36 per cent of its electricity demand comes from local dispatchable generation, rising to 50 per cent by 2025, but the controversy arises over its definition of qualified generation as providing “real inertia” and “fault current”.

This, the critics say, effectively excludes battery storage and other technologies in favour of “real inertia” from spinning turbines, meaning that gas generators will receive an effective subsidy of up to $50/MWh, reinforcing the market power of the small cabal that operate gas generation in the state.

The government says that the legislation could also encourage pumped hydro or solar thermal, but the solar thermal industry is also saying that would not be enough to bring new projects on line, and is urging a smarter solution that recognises emissions benefits and when this security is actually needed.

There is still debate about how much “real inertia” is needed in an electricity system. “Synthetic inertia” – from battery storage and also wind and solar farms – can provide much of the grid services, but the decision to effectively exclude it as seen as self defeating.

And the legislation is also being criticised for not finding a way to encourage other smart solutions such as demand management, currently being promoted by the Australian Energy Market Operator, as a way of encouraging more renewables.

AEMO has done some deep studies into the inertia issue, and as we reported recently, the thinking about inertia and whether it should be real or synthetic is evolving as rapidly as the debate around renewable energy penetration over the last few decades.

What seemed impossible a few years ago now seems do-able, as new technologies, and particularly new software enters the market, along with new thinking about how to manage the grid.

AEMO’s research suggested that half of the inertia could be synthetic, but is still cautious about going the whole hog. It commissioned a report from GE that shows that many technologies can provide security at much lower cost than thermal plant. A Clean Energy Council report also highlights this.
Younicos-Sign-270x278

German battery storage developer Younicos has no such doubts. “We have heard of the ‘real inertia’ discussion and it sounds a little strange to us,” says Philip Hiersemenzel from the Berlin-based Younicos.

“There is, of course, absolutely no need for ‘real inertia’ rather a ‘synthetic inertia’ to keep the grid stable,” Hiersemenzel says.

“In fact, if you’re starting from the premise that more and more power should and will be provided by cheap, clean, but intermittent renewables such as wind and solar, then ‘synthetic’ inertia has a number of manifest advantages.”

These included the ability to manage faster ramp rates. “This phenomenon is most easily evident on island systems – simply because they are smaller and it’s easier to implement a higher share of renewables there. But what holds on islands also holds for larger grids.”

And he says that because such “real inertia” plants always need to be on or run at a certain minimum in order to react to changes in the grid, they block large parts of the grid with this must-run capacity – which basically limits renewables.

There is a suggestion that South Australia may wait until they see the recommendations of the Finkel Review, which is likely to focus on the issue of energy security with high and rising shares of renewables.

AEMO, under the leadership of new CEO Audrey Zibelman, is having major input into this, especially given her experience in New York and running one of the biggest energy markets in the US.

This could give the option of either following in a national target that focuses on grid security, and particularly on technologies such as storage, demand management and efficiency, or continuing on their own but moving away from requiring “synchronous” local power, or “real inertia.”

One observer, who asked not to be named, says much of the debate going on about what “real” inertia is, and the technical merits of various technologies to provide inertia, has been self-serving and framed by interests of the gas lobby and gas turbine machine suppliers.

“As defined in the draft legislation, inertia only includes that derived from kinetic energy. This is clearly problematic for solar PV at small or large-scale, and battery systems.

“It strongly favours gas, (and potentially solar thermal and pumped hydro and biomass power as well, though by the time these plants might be permitted and built, at least a third of the scheme’s benefit will have expired).

“There is no value attributed to time of supply in a day, nor the stability conditions of the grid at any point in time. It will be settled annually, so it seems to bear little if any relationship to grid stability, which is a second to second matter, dependent on current operating plant and interconnector flows.”

He said there is no apparent influence about when gas might be dispatched to create the certificates. In other words, it would be possible for and AGL or Origin to “dump” gas into their generation to establish the necessary certificates they need when gas is cheap .

It would be meaningless when it comes to providing stability to the grid.

Dylan McConnell, from the Climate and Energy College in Melbourne, takes up that argument, saying the legislation as presented may do little, if anything, to improve system security.

“There is no incentive to provide additional capacity and “inertia” when the system theoretically needs it – when there is a lots of wind!” McConnell says.

It might increase gas generation when gas generally already generates (i.e. when there is not so much wind, and there a lots of imports and lots of gas).

mcconnell gas

Pointing to this graph above, McConnell says there is already more gas electricity produced (5300GWh) than the target next year (4500GWh).

“This leads me to think that there might be an emissions threshold somewhere between Torrens and Osbourne (… otherwise, why have the policy at all – as the certificate price should, in therory at least – reduce the marginal cost of all gas generators similarly).”

He says the current design would actually explicitly prevent flywheels and synchronous condensers – which could actually provide inertia at all time.

“That seems strange … and the seeming exclusion of batteries also makes little sense – particularly considering the fact that gas generation can only provide inertia when it is actually on! (Unlike batteries, which can sit there and respond very incredibly quickly) .

“Gas generators also have to run at minimum load (which can be significant) to do this, rather than a battery, flywheels and/or synchronous condensers.

“Most offline gas generation has T1 (time to synchronisation) greater than 5 minutes, and T2 times (time to minimum load) of more than 10 minutes – which is hardly useful from a system security standpoint (and compared with less than 100 milliseconds for batteries). ”

Keith Lovegrove, from the Australian Solar Thermal Association (Austela) agrees that there should be an emissions threshold, and a generally more sophisticated approach to awarding certificates.

In Austela’s submission, Lovegrove questions the “relatively low price cap”, saying it was too low to significantly influence generator behaviour at times of high wholesale prices in the NEM.

It also wanted further clarity on the definitions of “fault current” and “real inertia” and noted that there was a “reasonable case” to widen the eligibility.

“If this is done then it will be important to adjust other points to avoid perverse outcomes such as electricity storage units that cycle repeatedly on short timescales to artificially maximise Energy Security Certificate income.

Lovegrove favoured an approach that specifically rewarded lower emissions, generation when it is needed most for stability, and generation that would take place to avoid price spikes.

Andrew Stock – who worked for 40 years in energy industry, including thermal and renewable generation – said the legislation as currently framed favours outdated technologies, ageing plant and fossil fuels, and further entrenches market power of gas generators.
wind generation by state AER

“It creates market and regulatory barriers to deploying modern technical solutions to grid stability challenges … and there is little suggestion that grid security will actually be improved.

“It could actually limit the further uptake of renewable generation in the state,” which the AER notes in its annual report released on Tuesday amounts to nearly 50 per cent so far this year. (See the graph above, on the right hand side).

Add in rooftop solar, which is about 7 per cent of demand, and the share of wind and solar is already more than 50 per cent (see graph above).  

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  • DJR96

    Again, the incumbent FF industry calling the shots to prop up themselves and prevent positive change.

    There is a number of people thinking in the right direction, but not taking it to the logical conclusion. Batteries/inverters could quite capably provide all the security and stability required across the entire NEM if scaled up enough. And quite frankly that could be achieved for less than the cost of a new coal-fired power station. Think about that and the consequences and you’ll realise that it would be a very good investment.

    [I’m working on a white-paper I hope to have ready to release in coming weeks.]

    • Jon

      You can’t pin this one on the FF industry. This is the brainchild of Danny Price at Fontier Economics and populist, interventionist politics. There’s also a fair dose of AEMO in the policy. Until they modernise their thinking the regulators will never catch up with the technology capabilities that we all know exist.

      • DJR96

        When at least half of the executives and boards of AEMO and AEMC are ex-FF guys…… yeah, I can blame the FF industry.

        But you’re quite right, they all need to be purged out for good.

  • Miles Harding

    From the text:
    in favour of “real inertia” from spinning turbines
    let me rephrase this a bit:
    in favour of “real inertia” from spinning politicians

    I agree with Younicos; the concept of requiring mechanical ‘intertial’ devices makes no sense.

    By excluding everything that isn’t attached to a turbine, it leaves gas as the only likely contender. This would mean that SA is about to lock itself into a particularly miseable fossil fuel dependent future, being at the mercy of supplies, markets, other consumers and the highest bidder somewhere out there, any of which could effectively knock SA’s lights out.

    This is one of the dumber things happening in the australian energy market at present.

    • solarguy

      Yes and just as we thought, they had seen the light, they stammer into, are we doing things correctly. Oh dear, what is it going to take, to get on with what needs to be done. They were on the right track before for Christ sake!

    • Ron Horgan

      The Real inertia of spinning politicians. I splutter in me beer!

    • Mike Shurtleff

      I should have read your comment here first:
      “A simple requirement for all storage and generators to provide grid support through phase and frequency control would make sense.”
      Yes, exactly right! They are trying to pass a restriction against the better solution. Idiots on parade.

    • Alastair Leith

      The Minister seems to be a gas man, as per many ALP and Coalition Energy, Mining and Petroleum Ministers around Australia past, present and hopefully not much longer for the future, they all seem to be joined at the hip with gas. Can’t possibly imagine what life after Parliament will look like for him…

  • Peter F

    The only good thing about this is that they are thinking again. If they want real inertia for some unfathomable reason, put in some asynchronous flywheels or retrofit their wind turbines with appropriate software

    • Mike Shurtleff

      “If they want real inertia for some unfathomable reason…”
      That reason should be clear or called the BS that it is.

  • john

    This presents as a very dismal outcome.

  • JIm

    There’s mention of draft legislation being released. Does that mean available for all and sundry to examine and comment on? If so, where and how? Or does it mean tabled in Parliament without structured public consultation, or circulated only to a few chosen players? (A few tricks up the sleeve this Government has tried before.) It is important that this is not just a cosy insiders exercise, and we’ll all pay dearly (screwed again)!

    • Shane White
      • Shane White

        from the first doc:
        “Clean generators are those fuelled
        by gas or a renewable energy source
        within the meaning of the Renewable
        Energy (Electricity) Act 2000 of the
        Commonwealth.”

        AHHHHH HA HA HA HA

        Yeh this is all about polishing SA’s gas turd. Lib Lab Lib Lab Lib Lab. Yawn. Business As Usual.

  • hydrophilia

    A thought occurs: this legislation seems to have intentional faults (favoring ff gens) and unintentional faults (leaving space for lots of gaming of the system). What if we treated legislation like computer programs and offered rewards for hackers who find ways to game it…. BEFORE it is turned into law? If folks are are actually looking for ways to make good legislation (yes, that is a big “if”), this might help get the bugs out….

    Then again, one man’s bug is another man’s feature…

    • Alastair Leith

      This proposal would assume that markets and their cosy relationships with Ministers are there to achieve democratic, just and environmentally sensible outcomes. When, ever?

  • Shane White

    The aim is wrong. Governments must prioritise emissions reductions in accordance with science, or step aside. Energy security comes second, maybe.

    How are plans progressing for extraction of oil in the Great Australian Bight? Yes a federal decision but the state government haven’t been campaigning against it. Oh and CSG in SE too? All good for energy security, energy security for suckers that is.

    Ah well, carry on, Lib Lab Lib Lab Lib Lab. Business As Usual.

  • Mic Wells

    Need to clarify that this does not relate to the SA Government 100MW Battery Procurement tender. The headline seems absolute which is a bit careless given that there are seveal aspects of the Energy Security Plan that involve battery storage.

    • Mike Shurtleff

      Thank you for the clarification, but it’s really not good enough. The only reason to specifically legislate against synthetic inertia is to protect incumbent gas generators and attempt to restrict battery storage. It makes no sense otherwise. None.

  • Mike Shurtleff

    Synchronous inertia has been useful for fast reaction to sudden, unanticipated demand for power output, e.g. downed high power interconnects in storms, sudden failures of large thermal power plants (coal and NG). Decades old tech now. Fiber optic linked internet controls and battery storage is far better than synchronous gen at reacting to, and filling in for, the same sudden power demands.
    I’m not sure synthetic inertia is the best way to design that response, BUT…
    1. If they are going in eliminate synthetic inertia, then they sure as heck ought to supply an explanation why.
    2. They should also define battery storage as the preferred response to large unanticipated power drops. Synchronous inertia has always had the very clear disadvantage of causing power oscillations on the grid when reacting to those same large dropouts. In more than a few cases, this has caused cascading grid failures.

    Maybe synchronous inertia should be eliminated and synthetic inertia should be preferred! Synthetic inertia can be used to help prevent/control the destabilizing oscillations caused by synchronous inertia. Synthetic inertia is better if implemented correctly! Also, Batteries are better at responding rapidly to sudden power drops. They can react faster!

    The incumbent FF industry is promoting poor engineering practices and bad science for their own financial gain. Same as has been going on for quite a while now. Regulators and politicians that play along with them need to be moved out of the way.

  • Charles Black

    ‘Synthetic inertia’ should more accurately be called ‘stored inertia’ since it can easily be used to spin a turbine. The term synthetic in this context is derogatory.