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Wind, solar to fill grid services as incumbents cash in while they can

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Wind farms and new solar parks in Australia are expected to take an increasingly prominent role in providing stability services as well as energy to Australia’s electricity grid, but it appears that the incumbent generators are not going to give up without a fight, or at least an opportunity to line their pockets first.

As the Australian Energy Market Operator outlines significant opportunities for wind and solar farms to provide the sort of services previously only expected of coal, gas and hydro facilities, new data is pointing to a dramatic increase in the cost of these services that appears to be largely unexplained.

Research by the Climate and Energy Institute points to a five-fold increase in costs associated with the FCAS (frequency and ancillary services) market since 2014, to $200 million – with many of these rises occurring in states with little or no renewable energy, and no apparent lift in demand for the services.

smart grid

Currently, FCAS is being provided by coal and gas generators, and may be yet another example of fossil fuel technologies exercising their extraordinary market power to push up prices, as they have done almost without censure on the wholesale energy markets.

The deployment of wind and solar has been largely focused on providing energy and selling output into the wholesale energy market, but this is likely to change significantly in coming years as the technologies shift into energy security, providing frequency and voltage services, and providing inertia to the gird.

Jenny Riesz, from AEMO’s Future Power System Security Program, told a conference in Sydney on Thursday that there were significant opportunities for wind and solar to play a major role in providing services to the grid traditionally provided by coal and gas and other technologies.

“Renewable energy technologies are a solid contributor in the energy space, they are not a fringe technology anymore, either in Australia or internationally,” Riesz later told RenewEconomy.

“Now they need to step up to provide other services (to the grid). And that is a huge opportunity for wind farms and solar PV and other inverter-connected technologies.”

Unfortunately, Australia’s energy debate has been mired in accusations that technologies such as wind and solar can’t provide the essential grid services, and a debate that is often couched in simplistic terms about “baseload” coal and gas and “intermittent” wind and solar.

Wind farms, despite a lot of commentary to the contrary, can provide many of the services traditionally provided by coal and gas plants. But they need to be configured that way, and the market needs to provide the right signals.

Riesz says the first cab off rank for the new offerings of wind and solar is providing frequency control services – traditionally provided by coal, gas and other generators.

A trial at the newly built Hornsdale wind farm in South Australia will be the first in Australia, but Reisz says the manufacturers have no doubt that the machinery can do the job.

The difficult part for the market operator is creating a market design that provides the right signals for wind and solar farms to participate, and doesn’t have other consequences.

So, for a wind farm to provide FCAS, it will end up providing less power. But that may affect its contractual arrangements, Riesz says. These issues are not insurmountable, but they are important technical detail that need to be resolved.

The same applies in providing other services traditionally supplied by so-called “synchronous generation”.

“As Australia move to a future grid, these services will not be provided for free, so we have to create new mechanisms,” Riesz says.

These services include fast frequency services, fast regulation services, and synthetic inertia – all of which can be provided by wind and solar, and other technologies such as battery storage and synchronous condensers, if the market signal is there.

Some significant rule changes are already being considered that could help re-shape the energy landscape, such as changing the settlement time-frame from 30 minutes to 5 minutes to align with dispatch, and make the market more efficient and less prone to manipulation.

There are also calls to change the ancillary service market rules and have reserve and voltage control bids along a similar frame – possibly before the energy market changes.

This could encourage rapid response technology on the supply side – from wind and solar farms and battery storage – and also on the demand side, again with battery storage and with demand management.

In essence, it’s about the much-touted shift to a smart grid with exciting new technologies. The trick for regulators is to manage that market transition without breaking the market that exists.

That, admits Riesz, is a “non-trivial” problem, and estimating how much of this new technology is needed is still a work in progress. “As you get less and less synchronous plant – we will get to the point where we will need a lot of very sophisticated power system modelling,” she said.

As work progresses, there are some interesting developments in the existing market, most particularly the surge in FCAS revenue across Australia – up five-fold since 2014 to a total of around $200 million in 2016 – and there is no ready explanation why this has occurred across the board.

fcas sth australia

These graphs provided by Dylan McConnell, from the Climate and Energy Institute in Melbourne, show that South Australia has recorded the biggest increases.

The jump in 2016 may have been slated to the closure of the Northern brown coal power station, and the FCAS provisions imposed by the market operator when the interconnector was undergoing major upgrades.

But the data reveals that the price also jumped significantly in 2015, well before the Northern closure, and those price jumps have been repeated in other states such as NSW and Queensland, which have insignificant amounts of wind and solar compared to the size of the grid.

fcas queensland

And there doesn’t appear to be anything in the data that suggests a dramatic increase in contingency or regulation requirements – in fact, quite the opposite in some jurisdictions.

Indeed, Queensland has hardly any large-scale renewable energy, although up to a dozen large-scale solar farms and wind farms are scheduled to be built or begin construction in the coming year.

“In my mind this points to competition issues rather than underlying increases in FCAS requirements,” McConnell says.

So perhaps they are making hay while the sun shines, and the solar panels have yet to be built, and the wind farms yet to be configured.
fcas victoria
The same pattern has been found in the Victoria and New South Wales markets, with a large unexplained jump in FCAS costs in both states in 2016.fcas nsw

  

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  • Cooma Doug

    Cant fault this article at all.

  • The terminology is very unclear – to my understanding ‘synchronous’ – means locked in to the 50Hz mains frequency – and to the best of my understanding – wind generators use electronic converters to allow linkage of the variable generator output to the grid, so synchrony is automatic or they wouldn’t work.

    • Chris Fraser

      I suspect that – to make a serviceable grid state (ie something that starting generators can synchronise with) – requires somebody to start and generate at 50 Hz. This probably makes the phase angle of that generator the target setting for all newcomers.Traditionally, this job has probably gone to some overweight, high speed, high inertia spinning turbine that would need a lot of time to adjust to an earlier machine’s phasing.The electronics you mention mean that anyone could be first, or if not first, add their generation more quickly to the grid.

      • That’s why God invented quartz crystals (grin) – electronic inverters can generate pure sinusoidal power at exactly 50Hz. Maybe they should be the pace setters.

    • Chris Baker

      I too find the ‘synchronous’ terminology unclear and I think there are two important points. One is that the spinning generators are so intimately locked to the frequency they can’t spin at anything other than the grid frequency. Its as though all the spinning generators on the grid are on the same shaft. They all speed up and down together and can’t do otherwise. The inverter generators choose to match to the grid frequency and follow it by choice.
      The second point is spinning inertia. The spinning generators are remarkably large — hundreds of tonnes each — and with this large mass spinning together there is great resistance to any change in speed. This gives the frequency some stability and changes in load only nudge the frequency a bit one way or another and the governors have plenty of time to respond and bring on more steam or water (or less as the case may be) to bring the frequency back. On the other hand the inverter generators offer no resistance to change in frequency and just follow it wherever it goes. Hence the concern about decreasing inertia in the grid as more and more inverter generators are on line.
      It would seem more useful to use a self explanatory terminology such as inertial generators and non-inertial generators, or spinning and inverter generators. After all, as you say, both types are actually synchronised to the grid. I suppose there is a historical context that might explain this apparent oddity.

      • Peter

        In the case of an inverter which can generate sinusoidal currents without the backing of inertia, but which is required to provide frequency control services, what happens is that the phase angle changes. So, if a (new) load happens to drop the frequency, the inverter now provides (less) power at the matching frequency but with a leading phase angle. This leading phase tends to increase the frequency. (and vice versa). (Off the top of my head, from understanding synchronous alternators a long time ago).

      • Stephen Gloor

        There is two problems with this. First the inertia. When the frequency is changing rapidly these large machines cannot cope as they cannot change frequency fast enough and they tend to lag and lead the changing frequency making the oscillation worse and leading to them tripping out. This actually happened in South Australia in the statewide blackout. Sure they are great as inertia however unless they have very expensive controls only such things as OCGT are fast enough to cope with fast changes.

        With modern computers and variable frequency drives battery systems can synthesis any amount of inertia you want – you are just limited by the capacity of the inverter and the capacity of the batteries. A VFD can synthesise the required waveform and phase to stabilise the grid.

        There are also two types of wind turbines. Ones like Vestas use a gearbox and blade control to spin a generator at 50Hz which is then put directly to the grid so in essence they synchronous however as they have fast control over their speed they can stabilise frequency by co-ordinating all the turbines in the park and altering their frequency as one and provide delicate control.

        The other type is the variable speed turbine that is coming more into prominence because of the dropping cost of the electronics. In a variable speed turbine the blades can spin at whatever speed the wind is turning them and the variable AC is DCed and converted to 50Hz AC by large inverters. These are far more efficient as gusts and variable wind can be absorbed as the generator does not have to spin at 50Hz so strong gusts just generate more power. In a synchronous turbine the gust is wasted as the turbine has to slow down to remain at 50Hz.

        The point is that with a few batteries at the inverter of the variable speed turbine this can provide infinitely variable AC power in phase, frequency and amplitude to provide FCAS of a much higher quality than any Gas or Coal plant.

        Solar farms are the same – their inverters, with modifications and storage, can provide the same infinitely variable AC and can talk with the wind farm inverters to co-ordinate power output across and entire state.

        • Richard

          Thanks for that explanation. If highlights how important batteries and the development of battery technology has become. Also the amount of battery doesn’t have to be that high relative to generation. It’s all in the smart grid and smart generation.

          The answers are quite simple, we just need to roll them out.

          The problem in the short term is dealing with the old tech during the roll out.

    • solarguy

      Correct Hugh!

  • davidb98

    failure of market
    means failure of the basis of capitalism

    it would be simpler if all parts (regulation, generation, transmission, distribution) were fully in government hands

    so engineers could make the most effective technical decisions to meet industrial and community needs

    when some parts are playing games to maximise profits we have the current mess

    • Ian Mclaughlin

      Whilst I agree with what you say about Government control this will not work with the current COALition Federal Government as their bosses want to continue as we are!

  • Steve Fuller

    This article is very interesting and takes us into the next phase of the debate about the transition to 100% renewables. Unfortunately for those of us without an electrical engineering background (and 99% of the rest of the population) it is time for a simplification and explanation of the terms used.
    The lay person needs to understand the basic issues so that they can sharpen up the bullshit detector in anticipation of the purveyors of smokescreens and fakery continue to rail against renewables.

  • JoeR_AUS

    BTW I checked, Hornsdale Wind Forecast for the next 4.5 days is 8 hours of wind…..

    I suggest you read the AEMC, 2016 Residential Electricity Price Trends ‘exec summary’ as this is a eye opener to what is driving up the price of electricity.

    http://www.aemc.gov.au/Markets-Reviews-Advice/2016-Residential-Electricity-Price-Trends/Final/AEMC-Documents/2016-Electricity-Price-Trends-Report

    have a good w/e

    • Darren Burgemeister

      Already old

      CHAIR: I want to take you back to what occurred in South Australia a fortnight ago, on 8 February, where there was effectively a shortage of 39 megawatts, when you look at AEMO’s report about the demand versus the supply. Even just one of your projects, at 150 to 170 megawatts, could have easily bid for that spot price when you saw demand was high. When AEMO originally listed their warning sign, you could have gone straight in and said, ‘Yes, we can provide that.’

      Mr Green : That is right.

      CHAIR: Instantaneous—no waiting of four hours?

      Mr Green : Instantaneous, faster than anything else can react.

      Mr Gonzalez : No hour to four-hour wait at all.

      Mr Riebolge : That is what storage does. It basically enhances the demand management processes, where the demand management has other techniques supply associated with it, like direct load control of air conditioners or different types of plant et cetera.

      CHAIR: Just to be really clear: we would not have had to have power outages in South Australia if this type of technology were connected to the grid?

      Mr Green : That is right.

      Mr Riebolge : Precisely.

      CHAIR: And if you were able to bid on a fair playing field?

      Mr Green : That is right.

      http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=COMMITTEES;id=committees%2Fcommsen%2F85f8dc79-d9d5-4c29-beac-6a0f65ed4b94%2F0002;query=Id%3A%22committees%2Fcommsen%2F85f8dc79-d9d5-4c29-beac-6a0f65ed4b94%2F0000%22

  • Michael Murray

    The difficult part for the market operator is creating a market design that provides the right signals for wind and solar farms to participate, and doesn’t have other consequences.

    There is our whole problem in one sentence. Stop it with the free market rubbish. It’s not working.

    • Richard

      Agreed. I think you could say the same about every other field of free market endeavor within essential services. Like power,fuel, water, education, housing, health.
      The market in all these areas has been captured by the uber rich. To the point where democratic systems have become meaningless corrupted instruments of the same capitalist forces.

      It’s time to take back control.

  • Geoff James

    This is fascinating summary, thanks Giles and Dylan, and with the FCAS markets presently under review it’s timely to highlight these astounding cost increases. For a fair comparison it would be important to check whether there was a corresponding shift in value away from the respective wholesale markets in each state. It’s interesting that regulation FCAS is the most expensive kind in Queensland and (by a long shot) in South Australia and these are the states with prominent market power issues. I’d like to figure this out. I believe that a number of fossil-fuel generators regularly underperform on their FCAS delivery, so there is an opportunity for generators (and storage) connected to the grid with highly responsive power electronics to demonstrate their capabilities. Geoff.