The Australian Energy Market Operator, charged with keeping the lights on as it shepherds the country’s grid through a renewable energy revolution, has turned its focus once again on the needs for more storage and more and bigger links between the various state networks.
AEMO boss Audrey Zibelman on Wednesday released the first of a series of “insights” that will lead up to the second, updated version of its Integrated System Plan, its blueprint on how to manage the grid over the next 20 years as it heads towards a 60 per cent share in electricity generation for renewables, and likely much more.
The document includes new analysis on the impact and benefits of the proposed Snowy 2.0 pumped hydro scheme and Tasmania’s rival “battery of the nation” project, which the federal government has committed to (in the case of Snowy), or promised to support (in the case of Tasmania).
It also highlights the critically important role of shorter period storage, such as smaller pumped hydro projects and batteries, in dealing with intraday and overnight needs, and in meeting daily peaks.
And while AEMO sees Snowy and the Tasmania “battery” largely for seasonal and longer period storage, and as a back-up in case of drought and coal plant failures, it sees an important role for them if – as widely expected – coal generators make an early exit from the grid.
And for that reason, it also wants to fast-track new transmission lines it sees as critical to keeping the lights on and prices down.
“The NEM (National Electricity Market) has to manage the increasing variability of both supply and demand from changing weather patterns, consumer behaviours, growing variable renewable generation and declining reliability of existing generators,” Zibelman says in a statement.
“AEMO’s in depth analysis confirms the important role of energy storage to build power system resilience, improve reliability and to put downward pressure on wholesale costs.
“By 2030, wind and solar generators, including consumer rooftop systems, are expected to represent approximately 50% of the NEM’s installed generation and storage capacity, generating over 40% of energy consumed.
“It is critical we advance the required transmission infrastructure to support the integration of these new resources to ultimately deliver secure, reliable and affordable energy for Australians.”
In all likelihood, the share of renewables will be considerably higher than that, given that it’s based on the “neutral” scenario. The new document suggests more than 60 per cent is likely by 2040, but the faster-paced scenarios being considered by AEMO will likely put that level of renewables on the cards by 2030.
That was the conclusion of the first version of the ISP, released last year, and AEMO has been urged by the energy industry, including the incumbents, to consider a “step change” scenario that entertains an even faster transition, although the exact scenario to be considered is yet to be released, despite being promised originally for May and then for late June.
Either way, given Australia’s historically slow regulatory environment, and the fast pace of renewables development and the uncertainties about the future and reliability of the ageing coal fleet, AEMO is keen to put in as many safeguards as it can.
The insights paper, titled “Building power system resilience with pumped hydro energy storage” – and relatively short at just 22 pages, features a number of key insights.
The first is that long-term storage is needed not just because of the variability of renewables, but also because of the lack of flexibility of existing coal plants.
“The projected need for future storage is at a scale not seen before in the NEM,” it says. But it notes that Snowy 2.0 will crowd out other investments in long-term storage, at least until the retirement of coal plants accelerates in the early to mid 2030s.
The second insight is the importance of having new links to deliver the benefits of the two schemes around the grid, including the Marinus link (across Bass Strait), and the Hume (linking Wagga Wagga and the proposed new link to South Australia, and to Bannaby south of Sydney), and Kerang (to central Victoria).
The third insight is that AEMO wants these new links fast-tracked in case the Yallourn brown coal generator closes as early as 2028 (Some say it could go even earlier) and to help Sydney deal with peak demand as NSW deals with its own spate of coal closures.
The fourth insight identified by AEMO is that all this will reduce transmission costs involved in integrating renewable generation, as well as reducing the decline in marginal loss factors, and will increase overall power system security.
AEMO says there will need to be about 15GW of storage in place by the early 2040s, in its neutral scenario, which will ensure there remains the same amount of dispatchable capacity in the NEM as there is now.
There is some interesting stuff about the roles that AEMO sees Snowy 2.0 playing in seasonal and daily storage, and that of shorter term storage such as batteries.
AEMO says Snowy 2.0 and the Tasmania battery could play a role in daily storage, but appears to see its main role – at least in its early years – as a sort of backstop.
It would be able to shift excess renewables from one season to another (such as from spring and autumn to winter and summer), absorbing coal generation and stabilising their output, fill in during the narrowing “maintenance” gaps for thermal generators and “be there” in case of drought, an increasingly likely event in the face of climate change.
It shows this graph which shows a typical “winter” week, when it is playing a more active role in day-to day generation. There does not appear to be much in the way of battery storage, and AEMO estimates that the existence of Snowy 2.0 will deliver $86 million in fuel cost savings over shorter period storage, presumably because less gas is burned.
This next graph shows that the generation of Snowy 2.0 in winter and the summer peak will equate to its storage, but in other months, particularly spring but also late autumn, it will do more storage than generation.
AEMO definitely sees the greater value of Snowy 2.0 in longer term storage to deal with “years of hydro droughts, or when wind and solar generation is low.”
By the time the coal exits start to accelerate in the 2030s, the need for storage will jump from the about 4GW assumed for 2030 to 15GW by 2040. “By the end of the next 20 years, the projected need for storage to assist with energy shifting is at unprecedented scale,” it says.
This will provide for increases in shorter term storage, such as 6-12 hour pumped hydro and battery storage.
“Shallow pumped hydro (like the existing Wivenhoe and Shoalhaven) can provide value through intra-day shifting and may empty and fill multiple times in a month,” it says. “Batteries, including customer DER, hold less energy and are forecast to only provide intra-day energy shifting.”