The Australian National Electricity Market is a complex, sophisticated, manually operated electricity generation, transmission, distribution, and wholesale network situated predominantly on the East Coast of Australia.
In 2020, the NEM is federally regulated, operated and managed on one of the world’s longest interconnected power systems – from Port Douglas in Queensland to Port Lincoln in SA – around 5,000 km or over 50,000 circuit km.
The NEM generates around 200 Terawatt hours (TWh) annually, supplying around 80% of Australia’s electricity consumption.
The NEM commenced operation in 1998, marking a major change from 100 years of historical, mostly state oriented ownership, regulation, and politics of management of Electricity in Australia.
WA, the NT, and remote parts of Queensland and SA are not “interconnected” to the NEM and are therefore power islands. These power islands have separate electricity systems and regulatory arrangements.
In 2020, for the purposes of the NEM Interconnector analysis, the NEM spans 5 individual NEM Regions (ACT is incorporated via Transmission within the NSW Region), with Interconnectors between the 5 regions linking 100% of NSW, ACT, Victoria, Tasmania, and the most populous parts of Qld and SA.
The Politics of Electricity Leading to Interconnection of NEM Regions in Australia
The 5 east coast State (SA, Tas, Vic, NSW and Qld) NEM Regions evolved historically over 100 years from the State Electricity Commission (in SA Electricity Trust) owned and managed Grids.
Under early-stage private ownership and later stage State ownership (then in Victoria and SA back to private Ownership), these state grids were predominantly developed with taxpayer funds to provide Electricity as a universal guarantee to all taxpayers in all states and territories in Australia.
The State-Owned and Managed Grids remained “Disconnected” and independent, deliberately, reflecting State ownership and regulatory politics in Australia.
Each individual state utility was responsible for its own vertically integrated Electricity Utility, providing state-funded, managed, and regulated Generation, Transmission, Distribution, and Retail Assets.
East Coast State Electricity Interconnections in April 2020
First Interconnections between states stems from the development of the Snowy River Hydroelectric scheme completed in 1974.
The Snowy River Hydroelectric Scheme was primarily developed to provide Irrigation and Electricity to the states of NSW and Victoria, even though the Hydroelectricity Generation Assets physically exist 100% in NSW.
Complex Transmission and Substation networks were built from the Snowy Scheme to provide power to NSW, Victoria, and the ACT.
Detailed analysis of Interconnection between NSW and Victoria is therefore a complex legacy of history related to the development of the Snowy River Scheme Transmission Network.
For the purposes of this simplified analysis of Interconnection between all NEM connected states, the NSW/Victorian Interconnection network is identified for the 2020 NEM as 5 separate Overhead AC circuits, which can be considered as providing power transfer of 1600MW from Victoria to NSW and 1350MW from NSW to Victoria.
Less complex Interconnection between State Grids on Australia’s East Coast commenced in 1988 with the construction of the first SA-Vic Heywood Interconnector, between the southeast of SA and Victoria’s southwest.
The table below shows the chronology of the commissioning of the 6 x Interconnectors that link the NEM State Regions in April 2020.
1988 SA/Vic – Heywood 275kV Overhead AC, 460MW upgraded in 2016 to 600MW Vic->SA & 500MW SA->Vic
1999 Qld/NSW – Terranora 160kV HVDC 59km Underground plus 5km 132kV Overhead AC, 110MW NSW->Qld & 210MW Qld->NSW
2001 Qld/NSW – QNI 330kV Overhead AC, 350MW both ways upgraded 600MW NSW->Qld & 1000MW Qld->NSW
2002 SA/Vic – Murraylink 150kV HVDC, 180km Underground, 220MW Vic->SA & 200MW SA->Vic
2006 Tas/Vic – Basslink 400kV HVDC 291km Submarine cable, plus 72km Overhead & 11km Underground, 600MW Tas->Vic & 480MW Vic->Tas
2008 Vic/NSW – 3x330kV AC Overhead, 1 x 220kV AC Overhead and 1 x 132kV AC Overhead, 1600MW Vic->NSW & 1350MW NSW->Vic.
In summary, there are 5 simple “Interconnections” between State boundaries on the NEM in 2020, with the NSW Victoria interconnection represented by a more complex 5 separate overhead AC links.
Of the 5 simple interconnections, 3 are HVDC (i) SA-Vic Murraylink, (ii) Tas – Vic Basslink, and (iii) Qld – NSW Terranora connections, and 2 are overhead AC connections.
In total, Australia in April 2020 has 3 x HVDC Underground and Subsea Interconnectors and 7 AC Overhead Interconnectors.
This diversity of interconnection complexity and technology leads to fundamental questions that prompted this analysis. Those Questions include at least:
- What is the difference between AC Interconnectors and HVDC Interconnectors?
- What are the Advantages of HVDC vs AC Interconnectors?
- What are the Disadvantages of HVDC vs AC Interconnectors?
- Why use AC or HVDC technology in Australia in 2020?
- Why build New Interconnectors, or upgrade Existing Interconnectors?
Answer 1. What is the difference between AC Interconnectors and DC Interconnectors?
High-Voltage, Direct Current (HVDC) electric power Transmission uses direct current (DC) for the bulk Transmission of electrical power, in contrast to the more common alternating current (AC) HVAC systems.
Modern HVDC links typically use voltages between 100 kV and 800 kV.
The reason AC systems are more common than HVDC in April 2020 is historical. National Grids have been evolving for over 100 years. Solid-State Power Electronics for cost effective HVDC Systems did not become available until the early 1970’s.
A relatively small number of DC Transmission systems were trialled around the world in the early part of the 20th Century using Valve technology. Most were all brought to a commercially unsuccessful conclusion by the mid-20th century.
The very last HVDC System to decommission valve-based Thyristors was between the NZ North and South Islands in 2012.
Consequently, most of the the world’s Transmission and Interconnection links were historically built as AC Systems until the first modern day HVDC Interconnector was built in 1972 in Canada.
The Eel River scheme in Canada, which was built by General Electric and went into service in 1972 was the first HVDC system to use all Solid-State Electronics, in this case Thyristors.
The first HVDC Interconnector built in Australia was the 59km Terranora link between Qld and NSW, first commissioned in 1999. It was built using a Joint Venture between Country Energy and 2 Canadian investors, including a subsidiary of Hydro Quebec.
In Australia, only 5 Interconnectors have been built for the NEM since the mid 1980’s. Of the 5 Australian Interconnectors built, 3 have been constructed using HVDC technology.
Answer 2. What are the Advantages of HVDC vs AC Interconnectors?
Beyond a ‘break-even’ or ‘critical distance’, HVDC transmission systems cost less, even with the added expense of DC terminal stations.
An HVDC line has lower power losses than an HVAC of the same capacity in practically all cases, which means more power is reaching its destination.
For long-distance Transmission, HVDC systems are less expensive and have lower electrical losses.
For underwater power cables, HVDC avoids the heavy currents required for AC to charge and discharge the cable capacitance each cycle.
For shorter distances, the higher cost of DC conversion equipment compared to an AC system may still be justified, due to other benefits of direct current links.
Specific applications where HVDC transmission technology provides benefits include:
Undersea-cable transmission schemes
Endpoint-to-endpoint long-haul bulk power transmission without intermediate ‘taps,’ usually to connect a remote generating plant to the main grid
Increasing the capacity of an existing power grid in situations where additional wires are difficult or expensive to install
Power transmission and stabilization between unsynchronized AC networks. An extreme example being an ability to transfer power between countries that use AC at different frequencies. Power Transfer can occur in either direction, which increases the stability of both networks by allowing them to draw on each other in emergencies and failures.
Stabilizing a predominantly AC power grid, without increasing fault levels.
Integration of renewable resources such as wind into the main transmission grid. HVDC overhead lines for onshore wind integration projects and HVDC cables for offshore projects. DC grids with multiple voltage-source converters (VSCs) are one of the technical solutions for pooling offshore wind energy and transmitting it to load centres located far away onshore.
In countries like Australia that are prone to bushfires, Underground HVDC Interconnectors offer at least two key benefits.
(i) Underground Transmission lines can never be accused of being the cause of a bushfire.
(ii) In the event of a bushfire within the vicinity of an Underground HVDC Interconnector, the Interconnector will continue to operate, as opposed to above ground interconnectors being required to switch off.
Answer 3. What are the Disadvantages of HVDC vs AC Interconnectors?
The disadvantages of HVDC are in conversion, switching, control, availability, and maintenance.
- HVDC is less reliable and has lower availability than alternating current (AC) systems, mainly due to the extra conversion equipment.The required converter stationsare expensive and have limited overload capacity.At smaller transmission distances, the losses in the converter stations may be bigger than in an AC transmission line for the same distance.
Cost of converters may not be offset by reductions in line construction cost and lower line loss.
Operating an HVDC scheme requires many spare parts to be kept, often exclusively for one system, as HVDC systems are less standardized than AC systems and technology changes faster.
In contrast to AC systems, realizing multiterminal systems is complex (especially with line commutated converters), as is expanding existing schemes to multiterminal systems.
Answer 4. Why use HVAC or HVDC technology in Australia in 2020?
Frequency Isolation of NEM Regions is a Good Thing
In 2020, AEMO appears to believe it is a disadvantage for an HVDC System to isolate the Frequency of the AC System on either side of the Interconnector.
The implications of calling a NEM Region like SA as “Islanded”, as AEMO did when Heywood went down through extreme weather in January 2020 is an example of AEMO’s thinking.
In January 2020 when Transmission Circuits in Victoria were brought down by extreme weather, AEMO referred to the SA NEM Region as being “Islanded from the rest of the NEM”.
AEMO’s description was totally inaccurate as it implied that the SA NEM Region was not Interconnected with the rest of the NEM.
The SA NEM Region is only “Islanded” from the rest of the NEM when both Interconnectors, Heywood and Murraylink are down at the same time.
The last time that happened was in September 2016 on the day of the Black Start in SA.
AEMO’s description of “Islanded” implies that the SA NEM Region and the rest of the NEM were unable to share Power because one (the Heywood HVAC Interconnector) of the 2 x SA-Vic interconnectors was downed.
In January 2020, the Heywood Interconnector, close to the southernmost point in the border between SA and Vic was down due to extreme weather.
However, the Murraylink Interconnector, close to the northern-most point in the border between SA and Vic was unaffected and still operating to its maximum capacity as an Interconnector. SA was not “Islanded” from the NEM.
The Frequency of the SA NEM Region was no longer “Synchronized” with the rest of the NEM. But that is no different to the Tasmanian Region of the NEM which is only ever connected to the rest of the NEM by a submarine HVDC link.
The Tasmanian NEM Region Frequency is never “Synchronized” with the rest of the NEM.
Frequency isolation between regions on either side of a HVDC link is not a negative thing.
The proponents of HVDC Interconnectors identify that HVDC isolation of frequency at either end of the Interconnector indeed adds stability to the grids on either side of the HVDC Interconnector.
The same can be said for NEM Regions in Australia. Strategically, if the NEM is to continue in its current regulated form, AEMO should seek to ensure that each of the regions is “Frequency Isolated” using HVDC Interconnectors.
This will make each of the NEM Regions more stable and easier to manage from an FCAS perspective, while still providing Power Backup across the Interconnector in the event of unplanned outages in neighbouring NEM Regions.
Underground HVDC Interconnectors Performance in Bushfires
Australia experienced its worst Bushfires in modern times in late 2019 and early 2020.
The consequence of this successful litigation is the establishment of a Risk Mitigation Strategy by NEM Transmission and Distribution Participants that requires HVAC Overhead Lines close to or in the direct path of bushfires to be switched off.
This loss of power only exacerbates the difficulty in fighting bushfires in the locations where they occur.
Underground HVDC Transmission Interconnectors or Transmission lines solve at least two problems for NEM Transmission and Distribution Participants in the event of bushfires and in planning the Risk Management of their Assets during bushfires.
- Underground HVDC as opposed to Overhead HVAC or HVDC Interconnectors or Transmission lines are not at risk of starting bushfires.
- Underground HVDC Interconnectors or Transmission Lines do not need to be turned off if they are in the path, or in the vicinity of a Bushfire.
In Summary, it is much safer for NEM Transmission and Distribution Participants to consider undergrounding their Assets wherever possible.
In doing so, they can minimise their risk in causing fires, and reduce the need to turn off the power to bushfire affected areas.
Answer 5: Why build New Interconnectors, or upgrade Existing Interconnectors?
The extreme Australian Bushfire season of 2019/20 has highlighted a major risk for the NEM going forward.
Climate change has become an issue which potentially stops the NEM from doing business as usual for NEM Generation, Transmission and Distribution Participants.
If Australia must be forced to accept a higher risk of bushfires in response to climate change, AEMO’s operational strategy for the NEM will need to respond by accounting for this risk.
For NEM Interconnector, Transmission and Distribution Participants AEMO must consider how it will respond to the bushfire risk, including:
- How can AEMO work with Interconnector, Transmission and Distribution Participants to minimise the risk of Interconnector, Transmission and Distribution Assets causing or contributing to bushfires?
- How can AEMO work with Interconnector, Transmission and Distribution Participants to ensure that Power to bushfire affected areas is not cut, or that the duration of power cuts is minimised?
When the Bushfire Risk scenario is considered for new Interconnector Construction, Transmission Construction or even Distribution Construction, AEMO should consider mandating that all new Infrastructure is built underground.
When considering upgrading existing Interconnectors, AEMO should consider mandating retrofitting all Overhead Infrastructure with underground Infrastructure.
Considering that 3 of the 5 NEM Interconnectors built since the mid 1980’s are already either underground or Submarine HVDC Interconnectors, if there is a perceived cost premium for underground HVDC Assets, the Premium should be considered mandatory to reduce bushfire risks.
For NEM Generation Participants, AEMO must consider how it will respond to the bushfire risk, including, reviewing “Business as Usual” by considering a new DER Business Strategy for providing Power to Regional and Remote sites.
Two examples for AEMO to consider for a new East Coast Business Strategy in response to Climate Change including bushfire risk exist in April 2020, including:
Mike Cannon-Brookes Foundation initiative to build portable Solar Generation solutions in Australian Regional centres that are unable to reconnect to NEM Infrastructure for extended periods of time due to bushfire damage.
WA’s recently announced legislated initiatives to service Regional WA and other appropriate population centres with off-grid DER solutions.
AEMO, AEMC, AER and East-coast NEM Participants have been put on notice by the disastrous bushfire season that hit Australia in the summer of 2019/2020. The business plan for future NEM development cannot remain “Business as Usual”. Climate Change induced disasters must force a review of the Business Plan for the NEM.
NEM Participants including Generation, Transmission, Distribution, Interconnection and Retail participants must be prepared to evolve with the new realities brought about by Climate Change. Key initiatives from each of these players and from Federal and State Government must include initiatives in at least the following areas.
Embracing coordinated Distributed Generation and Storage plans at the Utility-scale, Industrial scale, and Residential Scale across all NEM Regions that will generate well in excess of 100% of Australia’s Energy needs.
Battery Electric Vehicles should be encouraged as a key component of Australia’s Energy Strategy with an appropriate bidirectional charging and discharging strategy supported by variable retail rates that encourage Vehicle to Grid support at times of Peak Grid Demand and BEV Charging at times of Low Grid Demand.
The use of Electrolysis to generate Green Hydrogen should be used instead of curtailment as a key component of the new NEM Strategy. Accompanying this strategy should come the long term objective of replacing the need for the use of Gas with Electricity or where necessary, Green Hydrogen.
Embracing off-grid solutions in regional and remote Australia that may include decommissioning some Transmission and Distribution Assets in favour of local Renewable Generation and Storage.
A review of Regulatory Responsibility and Accountability with a view to delegating Regulatory roles to all 3 levels of Australian Government consistent with the changes identified in items (i) through (iv).