They were clearly very good for clicks. Even The Guardian took a long run up on what it called “blackout forecasts” from the Australian Energy Market Operator, including here, and here. In Australia, the blackout stories were at the top of the pops of their most read articles.
The Australian, behind a paywall, needs little encouragement to amplify a scare campaign about energy, particularly given the opportunity to kick the boot into renewables. And other media just shrugged and went along for the ride.
In the end, there were no blackouts from the lack of supply. The supply balance did get very tight at one stage on Wednesday, and the market operator had to call up emergency reserves, and the state government asked consumers not to switch on their washing machines to avoid any unwanted load shedding.
But even as the Sky News commentators piled their dirty linen into their Miele’s and their Bosch’s, and on to the airwaves and the internet, most people in the energy industry were just thinking: There has got to be a better way to approach and manage this.
And there is a better way.
Australia’s biggest grid finds itself, quite absurdly, at the mercy of ageing and increasingly unreliable coal and gas-fired power stations, which when they are not offline for scheduled maintenance are particularly vulnerable to heatwaves and humidity which seems to cause the most innocuous piece of equipment to fail and bring the whole show to a halt.
This should be no surprise. AEMO has been warning of the risk for years, and the coal fired power station owners themselves have been warning of the dangers.
It was quite moving, in April last year, to see the engineers press the buttons that would send the half-century-old Liddell coal generator in the Hunter Valley to sleep for the last time. See: “She didn’t want to go:” Tears and hugs as oldest coal generator shuts down for last time
It had been a miracle that they kept it going so long, and it was with a sense of pride and deep sadness that they saw that clearly didn’t want to follow instructions and leave the grid. It didn’t want to say goodbye. When you’ve cared for a machine long enough, it might have the appearance of being a little sentient. Just ask a car buff.
But that’s no way to run a grid and manage a power supply. The wind, solar and battery and other storage projects are on their way, for economic, environmental and engineering reasons. There are battalions of them, more than 150 gigawatt of project proposals at last count gathering on the sidelines.
But the cavalry, as it were, is not arriving fast enough. It has been sent into the blind gullies and traps of an obtuse planning regime, thwarted at nearly every obstacle by a market design and rules that are no longer fit for purpose, and forced to engage in hand and legal combat with archaic grid rules and stifling bureaucracy.
The focus to date has been entirely on building new capacity, because that is what the market, at least in Australia, has always done: The business models, regulatory designs, and executive bonuses depend on it.
What has been ignored too often has been the smarter and cheaper alternatives on the demand side of the energy system, and consumers.
In the heat of the grid stress on Wednesday, AEMO was able to call on about 75 megawatts of so called “demand management” through one of the pre-eminent aggregators in the state, Enel X.
It was able to call on a range of clients, including RSL Clubs (some of them switched on their own diesel gen-sets rather than the sacrilege of turning off their pokies), and an assorted group of power users happy to get paid not to use power that they didn’t really need at the time.
But this was a tiny fraction of the peak load of more than 13,000 GW at the time of stress on Wednesday afternnon.
In other jurisdictions, demand response capabilities amount to more than 10 per cent, or even 15 per cent of peak demand. In NSW, that would have equated to more than two gigawatts. But it’s a resource that has been left untouched and unexploited.
Origin Energy has more than 1.4 GW of capacity available through its “virtual power plant” – the aggregate of connected devices and resources, including customer solar and batteries, controlled load hot water and flexible load through commercial and industrial customers.
This VPP forms a critical part of their trading position – helping the company and its customers dodge the worst of wholesale price spikes, but it can be available as a “last resort” for circumstances like those that arose on Wednesday.
Origin says it had a number of C&I customers across NSW in “pre-activation mode” ready to reduce their load, but says that in the end AEMO did not call upon their resources – possibly because big loads were being switched off or dialled down elsewhere, including government agencies and including the Tomago smelter.
Gabrielle Kuiper, an expert in demand response and what are called “distributed energy resources” (DER) in general says flexible demand is a lost opportunity for Australia, even though its potential has been identified for nearly two decades.
“The piece that we’ve really been far behind, for a very long time, is in flexible demand,” Kuiper says in a discussion on the latest episode of Renew Economy’s weekly Energy Insiders podcast.
“And we’re behind in two respects. One, we have basically no requirements on new appliances to be able to be flexible. And then, of course, there’s the market participation piece.
“And the issue is that the way in which the wholesale demand response mechanism was set up means that it’s only applicable or only large commercial industrial loads can participate. And then also that the AEMO criteria around participation in terms of baselining, are overly narrow.
“The International Energy Agency suggests that world’s best practice, or good practice, would be more like 15% of peak demand available in demand response. We don’t have that.”
Carl Hutchinson, from Enel X, says Australia is a “bit behind” the rest of the world but there is no reason why it cannot get demand response equivalent to 10 per cent of peak demand. It already gets more than five per cent in the separate W.A grid.
“The capacity is there,” he says. “We need the right rules in the market.”
A 2009 study commissioned by the Federal Energy Regulatory Commission (FERC) found that, under certain market conditions, peak demand in the US could be reduced to the extent it would eliminate the need for the equivalent of between 1,000 and 2,500 peaking power stations, the type that South Australia is trying to get out of mothballs now – precisely because there is insufficient demand response developed in the state.
The other interesting feature of the AEMO response on Wednesday afternoon were the directions to two of the big batteries in the major load centres – Wallgrove in western Sydney and Waratah on the central coast.
Even though the Waratah Super Battery is only just starting to work through its commissioning process, it was asked to keep 96 megawatt hours on standby if needed. That’s just a fraction of what it will be capable of doing when fully complete – 850 WM and 1680 MWh – and will be a major new tool for the market operator.
That sounds like a good idea, in the same way that AEMO has flagged that it could also instruct batteries to discharge completely to stand ready to intervene when the opposite situation arises – when there is too much supply and not enough demand.
Batteries are clever machines, and can provide a whole bunch of different services. The big question for battery developers, though, is how they get compensated in such situations. They like to charge when demand is low and discharge when demand and prices are high.
Being told and sit and watch a market they had been training and trading for will be frustrating, and – according to some – yet another complication for their business models and spread sheets.
That should be a reasonably easy problem to solve, because the temptation for AEMO to dip into this rapidly growing resource will be overwhelming.
Very soon there will be so much more capacity, including the 700 MW, 2,800 MWh Eraring, the 500 MW, 1,000 MWh Liddell, the 275 MW, 2200 MWh Myrtle Creek, and the the 415 MW, 1660 MWh Orana batteries, and others at Wiliamsdale, Limondale, Capital, Quorn Park and New England.
That will add more than 2.5 GW of power and nearly 10,000 MWh of storage to the grid and the resources that AEMO can drawn on. First though, there are a couple of hot summers to negotiate, and then the anticipated closures of Eraring, followed by Vales Point.
