AEMO provides glimpse of future grid: Not much fossil fuel, even less “base-load”

The Australian Energy Market Operator has provided a fascinating insight into the potential future grid as it works on modelling that will underpin its 20-year planning blue-print for the energy transition in Australia, the Integrated System Plan.

The grid, it makes clear, is likely to be completely different from what it is today and what many imagine it could be.

Thermal generation (gas and coal) will play a much diminished role, so called “base-load” will barely exist. And in its place wind and solar will provide the bulk of generation, while balance and flexibility will come from storage, hydro, and imports/exports, while a whole range of technologies will play an important role, including electric vehicles, virtual power plants, and household batteries.

AEMO has been working on a series of workshops for the latest ISP, which is a huge volume of work that will lay out a plan for five different scenarios ranging from slow to “step change”. A draft of its findings is expected later this year, with the final product due in mid 2020.

It’s a document that, hopefully, will help change the energy debate in Australia, which has been stifled by ideology and 20th century thinking. More importantly, it will become something of a master plan that can be referred to by institutions looking to ensure the rules are keeping up with technology, and by politicians who want to know what is possible, or not.

The first version of the ISP released in 2018 was focused largely on transmission, and a couple of relatively conservative scenarios based around the major party policies that existed at the time.

But in the new version, AEMO was urged to go further. Ironically, it was the major energy utilities – those that own the bulk of the country’s coal and gas plants – that wanted to know what the long-term Paris target of no more than 2°C warming, and let’s try to cap it at 1.5°C, meant for their business, and investment decisions.

Others wanted to get a clearer idea of storage needs and the role of other technologies, particularly the “distributed” ones. like VPPs, EVs, and demand management, and the creation of renewable energy zones

Last week, AEMO presented what it emphasises is very preliminary modelling to illustrate where the grid is heading, and to provoke some discussion.

The big take away, of course, is the changing source of generation. There is nothing for coal, apart from small upgrades; and capacity in 2040 – under the central scenario – is about one-third of current capacity. Gas, despite a flurry, falls by nearly half; hydro is about the same.

The big moves are in storage, and about another 10GW will be needed for this, and solar and wind capacity will both be at around 22GW to 24GW.

But what does all this look like in the day to day running of the grid. That will be revealed when the full draft is tabled in December, but AEMO gave a preliminary insight into the changes.

Here’s an “average day” in NSW in February 2020, a grid dominated by thermal generation (coal and gas) with the midday hours seeing some solar – rooftop and large-scale, wind playing a minor role, and hydro mostly busy in the evening. There is a tiny bit of storage below the line (most likely coal going into pumped hydro).

But here’s what a “typical” day in NSW might look like in 2040.

Note that “thermal” capacity – coal and gas – is vastly reduced, relegated to redundancy by age, new wind and solar capacity, and cheaper imports. Large-scale solar dominates during the day, wind is strong at night, and storage plays a critical role, absorbing excess solar during the day (below the line) and playing a major role in the evening peak.

VPPs begin to play a role, and EVs are also visible on the grid.

Of course, this is just a “typical” day, and the profile will change with each season, and depending on the weather of the day, and in the end how much wind and solar is actually built in NSW, and where, and to what extent, the state relies on imports from Queensland, Victoria, and South Australia.

The AEMO series – and the energy wonks can find it here – also provides some insight into the hourly changes of supply and storage, and the different roles played by various technologies, both at large scale, and in the low voltage networks with distributed resources such as rooftop solar, batteries and EVs.

Just to give a taste, here is what it might look like at 11am on a sunny day (above). Solar dominates (as it did in South Australia last week), and in this case utility-scale solar production is more than 10GW. This is augmented by wind, hydro and imports, and coal and gas are providing just one-tenth of solar’s input. Some of that solar is going into storage.

At the distributed level, rooftop solar PV is charging EVs, filling up batteries, and pushing another 2,424MW back into the grid – twice the output of coal and gas.

Now let’s look at 8pm (above). The sun has set, so solar has gone, and the biggest single source is now storage. Wind, in the early evening, has decreased, and hydro, imports and thermal generation have ramped up. Households have stopped pushing electricity back into the grid, and are now drawing down, with the help of some household batteries, and the EVs are still charging.

How all this is managed – and the multiple variables that go with 5-minute interval trading and settlements and switches in demand and supply – is the primary challenge facing AEMO, whose job is to keep the lights on.

It’s not just a matter, however, of simply building more wind and solar, and closing down the old and dirty coal generators.

There needs to be enough transport to deliver the wind and solar resources, import and export with other states, and the storage available – not to mention the new rules that will facilitate the different technologies and business models, and will provide the right market signals to ensure the right resources are switched on at the right time.

Hence the need for a plan, and a 20-year blueprint. There won’t be one forthcoming from the federal government.

Here’s what it might look like, and you will see the shift here towards renewable energy zones to harness the best resources and link them efficiently to consumers. Storage also grows, but later than you might expect.

In South Australia, pumped hydro only appears on the 2040 time scale, and not before. That seems surprising, given the enthusiasm of the state government and ARENA to sponsor at least one project sometime soon, and the fact that federal energy minister Angus Taylor has three such projects on his underwriting shortlist.

A couple of other interesting things to note from the preliminary document: AEMO has downgraded the amount of home batteries and EVs that may be in the system over the next decade, has lowered assumed costs for both renewables and gas, and flagged that coal generators may exit sooner than thought.

Again, it is important to emphasise that this is only preliminary. But it’s gratifying to know that someone is looking at and planning for the future. If you spent too much time listening to federal politics, or reading some of the submissions to the nuclear inquiry, you would be forgiven for thinking there wasn’t one.