The Australian Energy Market Operator has laid out an action plan to accommodate levels of up to 75 per cent “instant” penetration of wind and solar in Australia’s main grid by 2025, saying the country had the technical know-how to cope with such a high penetration of wind and solar, but needed to urgently update the market and regulatory settings.
Releasing the long-await Renewable Integration Study, a key adjunct to its 20-year blueprint for the grid transition known as the Integrated System Plan, AEMO chief executive Audrey Zibelman reinforced the widespread view that integrating very high levels of renewables is not so much a technical challenge.
It’s more about updating rules and regulations to make them fit for purpose for a new system, and to add new markets to ensure the availability of essential services such as inertia and voltage. Without these changes, AEMO warns it may have to limit the contribution of wind and solar resources to 50 or 60 per cent of electricity supply at any point in time.
“Australia already has the technical capability to safely operate a power system where three quarters of our energy at times comes from wind and solar energy generation,” Zibelman says in a statement accompanying the report.
“However, to do so requires changes in our markets and regulatory requirements. Otherwise, AEMO will be required to limit the contribution of these wind and solar resources to 50 or 60 per cent of electricity supply at any point in time, even though they are the lowest cost way of providing electricity,” she warned.
Wind and solar have recently accounted for close to 50 per cent of supply in the National Electricity Market in some trading periods (more than 50 per cent including hydro, and up to 140 per cent wind and solar in South Australia), although there have been some 5-minute intervals where wind and solar has already exceeded 50 per cent.
Zibelman is looking for major changes to the market design in the work currently being led by the Energy Security Board. Most of all, AEMO wants great flexibility, but is also pushing for what are known as “ahead” markets, ensuring the operator has better visibility of what supply will be available, and wants to create new markets for key services such as “inertia” and voltage, as RenewEconomy reported last week.
AEMO is also looking to replicate much of the recently released distributed energy roadmap in Western Australia in the nation’s main grid, and is pushing for new inverter standards that will increase the ability for rooftop solar system and battery storage to be harnessed and aggregated to provide energy and grid support.
This is critically important because consumers – both household and business – are clearly going to switch in even greater numbers to rooftop solar, and other technologies like battery storage and electric vehicles. Rooftop solar is tipped to reach 85 per cent of instantaneous penetration in South Australia within a few years, and well above 50 per cent in Victoria and Queensland.
The rollout of new transmission lines to help transport growing amounts of wind and solar to where it’s needed is also a key element, although it has largely been discussed in the ISP.
The RIS is a significant document, particularly in a country where the energy debate is constantly de-railed by vested interests and ideologues who still insist that it is impossible to accommodate high levels of wind and solar. The Liberal donor and coal plant operator Trevor St Baker is chief among them, and has a willing audience in the ranks of the Coalition government and Murdoch media.
AEMO, which is responsible for managing grid and keeping the lights on, debunks this and says there is no reason Australia cannot have a very high level of renewables:
“Beyond 2025, AEMO has not identified any insurmountable reasons why the NEM cannot operate securely at even higher levels of wind and solar penetration, especially with ongoing technological advancement worldwide,” it notes.
Indeed, its ISP maps out a path – mostly through infrastructure – to accomodate a 90 per cent share of renewables in Australia’s main grid by 2040.
That is an annual share, not just an “instant” penetration. And so that means that on many occasions there will be well in excess of 100 per cent wind and solar (compared to demand requirements) that will need to be stored – in batteries, in pumped hydro, or even in hydrogen electrolysers as suggested by the Australian Energy Renewable Agency this week.
Zibelman adds in an interview with RenewEconomy: “The challenge is that it was difficult to envision the internet before the internet came, and smart phones before the arrival of smart phones. We see these changes because we experience them every day.
“Ultimately, the issue is this – we want electricity to remain affordable, reliable and secure …. we need to adapt so the consumers can get the benefit of the technical innovation. That’s really our goal.”
The focus and intent of the RIS is a call to action to ensure that – given the pace and complexity of change in the NEM – Australia’s traditional slow moving regulatory institutions can create a highly flexible market and regulatory framework that can adapt swiftly and effectively as the power system evolves.
The list of “things to do” outlined by AEMO in the report – the product of a nine-month work program by the seven-strong Future Energy Systems team, and a big cast of outside consultants and review panels – is long and complex.
There are 16 major actions that it proposes – from updating inverter standards, to ensuring enough frequency and voltage control, minimum system strength, and the creation of new markets, that must be in place ove the next five years, many of them within one or two years.
The prediction that Australia’s main grid – which covers South Australia, Victoria, Tasmania, NSW and Queensland – will experience up to 75 per cent “instantaneous” wind and solar is based on AEMO’s “central” scenario in its ISP, which assumes current policy settings. In the “step change” scenario, dialling in increased efforts to reduce emissions, the share of wind and solar could hit 100 per cent wind and solar in the NEM by 2025.
But the report warns that constraints will be imposed to limit the share of wind and solar to between 50 and 60 per cent unless the AEMO wish list is delivered. Zone B indicates constraints that could be imposed due to the lack of inertia and system strength, while Zone C identifies a shortfall in “synchronous” capacity.
The document says operation in Zone C, with up 100% of renewable generation operating securely, is “theoretically achievable” in the future. This would, however, require more advanced methods of system operation, coupled with provision of essential system services to ensure adequate system flexibility, frequency, and voltage management.
AEMO notes that the current dispatch is engine not able to cope with increasing complexity, and more manual intervention is needed. This is reflected in the number of “directions” and other interventions, and was particularly obvious when the South Australia grid operated as an effective “island” for 17 days after the collapse of the main transmission link in a storm on January 31.
“To manage future operating scenarios with even higher penetrations of wind and solar resources (and potentially more participants), new operating tools, processes, and market changes will be needed to automate and manage the decision-making and scheduling process to efficiently source the required system services and ascribe a market value to them.”
Zibelman has long advocated “ahead” markets to try and solve this problem, particularly in the provision of services such as inertia, frequency and voltage.
“All this was once provided by large centralised generation,” Zibelman tells RenewEconomy. “Now we need to buy it from other sources. We can’t do that in real time …. we need to make sure that it is available before then.The alternative is to do what we do in South Australia (where AEMO issues repeated directions to the market). That is more expensive, and that is a failure in the market because it is not sending the right price signals.
“When you don’t have price signals that are durable, no one will invest, unless AEMO pays an administration price.” That has been a key feature of the provision of new demand response services and investments such as the Tesla big battery at Hornsdale, although some of those payments have come from state government and other institutions keen to test the new technology.
Indeed, AEMO is currently assuming that old technologies such as synchronous condensers will play a critical role in providing some of the key services, such as system strength. But it also readily acknowledges that new technology such as “grid forming inverters”, already trialled at Dalrymple North in South Australia, and soon by the expanded Hornsdale big battery, could also do the same job.
Hence the need for flexibility, in market design, rules, and regulations. “We need flexibility and adaptability,” Zibelman says. “We need to be able to pay for resources that can ramp on and ramp off, and can turn on and turn off. Our problems will be low demand and high demand, and both of those can happen in the same week.”
And the cost of all this? The RIS does not count that, but it will be factored into the ISP. Despite the cries from the fossil fuel lobby and conservatives that the system costs will be “ovewhelming” AEMO is convinced that it won’t be.
“There is a risk of inaction and a cost of inaction, we need to avoid that,” Zibelman says. “I’m optimistic that it (the regulatory and market changes) can be done and that we have enough time to get it done. We don’t want market and regulatory reform to a get in the way of the economic benefits of cheaper and more efficient technologies.”
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