The new head of the Australian Energy Market Operator has reinforced the need for Australia’s main grid to be able to handle 100 per cent renewables by 2025, but admits the organisation is not yet sure of the best path to get there.
Daniel Westerman, who took over as CEO of AEMO in May, told RenewEconomy’s Energy Insiders podcast there are a range of different scenarios to reach the goal, which we should point out is for the grid to accommodate short periods of 100 per cent renewables, not over a whole year. At least, not just yet.
“I think there are a range of different potential scenarios,” Westerman says.
“For us, the challenge is all about the shift from rotating kit, the big coal fired gas fired generators that provide system services … around inertia, system strength and others, to .. inverter based generation, solar and wind that is injected into the grid through these electric electronic converters.
“And the challenge that gives us is the the system security mechanisms that we’ve had in the pas just aren’t there in the same way.
“And so you asked before, what’s the what’s the pathway? What’s the roadmap to get there? The honest answer to that jobs is we don’t know yet.
“And that’s why we need to set it as an ambition because we think it’s the right thing for Australia to be able to, to to have a grid that can cope with 100%, instantaneous penetration of renewables.”
The shift to inverter based technologies, including from battery storage, is already happening. It’s taken a major share of frequency control and ancillary services, is now providing “synthetic” inertia, and testing concepts such as “virtual synchronous machines” that use “grid forming inverters.”
This technology is here, although as Westerman says, not proven at big scale. The challenge then for the grid operator is to design systems and protocols that allows this to happen, and to manage the transition from one system to another, which is probably the most challenging part.
Part of that challenge is getting to grips with rapidly changing technology. Just five year ago, AEMO predicted the biggest battery on the grid would be 1MW. Today, a 300MW/450MWh big battery is nearly complete.
“We think we’ve got the tools probably to get us to about 75% instantaneous penetration,” Westerman says, noting the important work of the Renewable Integration study that identified 75 per cent as the 2025 target.
Since then, however, AEMO has updated its Integrated System Plan, which charts a 20-year blueprint that includes the “step change” scenario, which models 90 per cent renewables by 2040 (over the year), and 100 per cent instantaneous by 2025.
“It’s where the world is headed. It’s where Australia is headed. And what we see is that the market is moving faster than what we call our step change scenario,” Westerman says.
“And the step change in that report was forecast at 100%, instantaneous penetration by 2025. And as the market operator, we need to be able to facilitate that.
“And if we don’t, we’re constraining off the cheapest electrons free electrons, if you like, for Australian consumers, and I don’t think that’s the right outcome for Australia.
The chances are that the pace of change will quicken. The ISP is now being updated, and on Friday AEMO will release the new scenarios to be modelled, including an “export superpower” scenario that will accelerate that transition to renewables.
“We need to put our best minds from right across the industry, the operator, … generators, to new connections, to jointly work together to figure out how we engineer grids that are capable of running at 100% instantaneous penetration of renewables.”
Westerman is also a member of the ESB, which this week forwarded its proposed reforms to state and federal energy ministers.
The interview took place before leaked copies of the proposal sent alarm bells around the clean energy industry, who fear key mechanisms will distort the market, lift prices, prop up coal, and make it harder to invest in wind and solar.
Westerman, without discussing the details, said he was please with the package.
“I can’t talk about what’s in there. I guess the thing that I would say is that I was pleased to be part of a process where we really listened to industry, there was a lot of consultation that came back from the consultation paper that was published around about Easter time.
“And we really listened to that, or really took that on. And I’m really optimistic about the package of reform that we’ve proposed to ministers and look forward to the decisions that come out.”
It’s not clear that the industry shares that view. See: Big win for coal generators as ESB pushes for Taylor’s favoured capacity markets and Propping up coal: Clean energy sector says ESB reforms will distort market
Westerman also talked about the connection process for new projects, many of which have suffered lengthy delays. Many others have been told not to bother applying until the network in certain areas is upgraded.
“I want Australia to be the best place to connect with a new generation asset in the world,” he said, noting some 50GW of projects in the pipeline, and a proposed new connection agreement process that is being developed with the Clean Energy Council.
“We’ve connected 121 new wind and solar projects over the past four years, 32 of those were in 2020, which was 3300 megawatts, or nearly 6%, of the NEM generation capacity,” Westerman said.
“And so there is some some good momentum and good feedback of the connections reform initiative. But like I said, it is early days, and … there are many, many more ideas and improvements to make in that process.
“I’ve worked across the UK in the US, I’ll built a large renewables business of about a gigawatt in scale across the US and operated a large part of the electricity transmission business in the UK.
“And I’ve not seen such a reform initiative, where the system operator comes together with such an influential set of people to drive change in the industry in such a collaborative way. So I’m very optimistic about what we can achieve in improving the connections process.
“I can’t control policy or PPAs or the cost of debt. But what I can affect is the risk premium that people associate with connecting in the connections process.”
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