AEMO: Our advice was pretty straight forward, we need dispatchability

As the federal Coalition continues to push the case for an ageing, unreliable, and slow moving coal generator to maintain energy security in the 2020s, the Australian Energy Market Operator has underlined its advice to the government last week: it wasn’t a push for more baseload.

“We need flexible capacity that can be switched on and off, and we need to transition to a new generation of Australia’s principal energy market institutions, and the newly-formed Energy Security Board.

“Our advice was fairly pragmatic,” Zibelman said. “We are concerned that on a 45°C day if we lose a generator (which AEMO has said is quite likely) we want reserves in the system to be able to respond.

“In our report we identified the fact that with amount of variability (from solar and wind energy and electricity usage) is changing rapidly, we need resources that can change rapidly.

“That may be different to traditional baseload resources, which do not move a lot.  It doesn’t mean baseload is bad, it’s just that we need a different portfolio. (Baseload) may not be able respond in the time period we need it to respond.”

Sound like Liddell? Not really. The plant owner AGL Energy has made it clear that Liddell is old, increasingly unreliable, expensive to maintain, prone to unexpected outages and can’t be relied upon at times of peak demand, particularly as temperatures rise.

Zibelman’s comments, like the two AEMO reports it released last week, contrast starkly with the Coalition government’s contention that AEMO had insisted  that rapid action was needed, and that that rapid action must mean that Liddell’s life span must be extended.

Zibelman made it absolutely clear that her preference was for fast, flexible technologies, both in supply and demand, and bother in front and behind the meter. Importantly, it had to be technology that the market operator could rely upon.

“The system is changing,” Zibelman said. “That’s not a bad thing. What we need to do is to start saying we have to think about next the generation of technologies, the next generation of markets and how to take advantage of it.”

Earlier, she noted: “The power system works best when we can operate it in accordance with the law of physics. (That means) we need to make sure we have sufficient tools to respond in  a real time system.”

She noted that a focus was needed on system services such as inertia, voltage and frequency, which came as “ancillary services” to thermal generators, but now had to be sought elsewhere. This was not a reason not to evolve, just a reason to focus on how to set a market to encourage these technologies and capacities.

“Our advice was pretty straight forward,” she said: “As system has a higher level of (renewable) penetration, issues like frequency, violate and inertia needs to be addressed – not because it a bad thing, but because it was bundled previously with the big generators ….

“It’s not just having enough of these resources, it’s about having enough of these resources at the time and the place you need them. At all times AEMO needs the ability to turn something on and something off to maintain system balance,” Zibelman said.

She spoke of demand management, one of her favourite topics and preferred mechanisms in the US, but said it had been communicated badly and misunderstood – particularly the idea that the market operator would turn off the lights or the air-conditioning.

“What we are talking bout is being able to use rotating mass, use battery storage, electric vehicles, and create a more integrated system.”

She said it was clear that the Australian market was heading towards 30-40 per cent “distributed generation”, which means mostly solar and storage behind the meter. These technologies can and needed to be harnessed to ensure that they contribute to grid security.

Asked specifically about Liddell, Zibelman said choosing that as a preference would require an analysis  to determine its level of dispatchability and its flexibility, and its ability to deal with reliability concerns.

“What do we want to do is to make sure we are riding the technology innovation curve in the right way…. it all has to fit. We’re thinking about what do we need, what do we have, and then what are the right mechanisms to get the best outcomes that are economically sound.”

The event in Melbourne also heard, for the first time, from Kerry Schott, the newly appointed chair of the Energy Security Board, whose job is nominally to guide government policy on these matters, but who appear to have been completely ignored by the Coalition government over the last week.

Schott, a former chair of network company Transgrid, said that because electricity was an essential service, it was extremely political, particularly when the lights go out.

She noted that prices had been rising to “very high levels” for consumers, due to a range of reasons including the lack of certainty around emissions policies.

“We have seen decades of excess capacity, but that now finished. We are in a new realm,” Schott said.

But she added that the penetration of wind and solar would continue to increase – “despite what the politicians may decide” and that by the mid 2030s, when ageing coal plants retire, coal will provide just 24 per cent of supply rather than 70 per cent. “That transition is one that needs to be managed very carefully.”