Australia’s most advanced renewable grid is its most secure, but NSW must scramble as it nears “no coal” scenario

South Australia, the most advanced renewable grid in the country and even the world – thanks to its unrivalled near 75 per cent share of wind and solar – is also the most secure, according to a major new report on the state of the energy transition.

The Transition Plan for System Security, published on Monday by the Australian Energy Market Operator, identifies South Australia as the only state grid which is not facing a system strength deficit in coming years.

That’s largely because South Australia went first, and it went hard and fast. Its last coal fired power station closed in 2016, and because it has such a high percentage of wind and solar, as well as rooftop PV, it has had to deal with the issues around frequency control, inertia and system strength before other states.

It was the first grid in the world to build a large scale big battery – the Tesla big battery – and paved the way for battery grid-forming inverters. It now also has sufficient synchronous condensers, big spinning machines that do not burn fuel, to meet its system strength needs.

South Australia was also the first to introduce controls over rooftop PV, allowing the market operator to deal with another important new dynamic on the grid – minimum system load – when network demand is pushed below zero because rooftop PV production is more than local demand.

When the new transmission link to NSW is complete in 2027, South Australia will be the first in the world to be able to run its gigawatt scale grid at times with “engines off” – i.e. no gas plant required for bulk power or system security – as it nears or even achieves its target of reaching 100 per cent net renewables.

All this has put the state in good stead for the challenges ahead.

But the situation is not so pretty for states like NSW and Victoria, which are facing the imminent closure of their ageing coal fired generators such as Eraring and Yallourn in coming years, and face repeated market interventions if they cannot secure the replacement capacity for these critical grid services before then.

NSW is already scrambling to meet its system strength needs, with Transgrid given permission to lock in contracts for 10 small syncons for NSW – even before they have finalised regulatory approval – and working on issuing contracts for up to 5 GW for grid forming battery inverters (GFM).

But AEMO says more needs to be done, and it is particularly worried about the spring of 2027 – particularly if Origin Energy’s 2.88 GW Eraring facility closes in August, 2027, as currently flagged – because those new syncons are not likely to be in place before 2028.

“Risks of needing to de-energise assets and shed load may also arise if there are insufficient synchronous generators available to direct, particularly under outage conditions as currently planned for Spring 2027,” it warns

“Further decommitment of coal generation shortly after Eraring’s retirement could exacerbate these existing issues.”

That is sure to be another major consideration as Origin discusses the final closure arrangements with the state government and AEMO, considers a phased closure of the facility, as CEO Frank Calabria flags as a potential outcome in his interview in the latest episode of Renew Economy’s weekly Energy Insider’s Podcast.

And, remarkably, AEMO predicts that NSW – the country’s biggest grid with the biggest coal fleet – could reach, as early as 2031/32, a “credible no coal scenario” where the combination of exits, planned outages and contingencies means there are periods with no coal generation available for dispatch or directions.

Similar issues arise in Victoria with the planned closure of Yallourn in 2028, and in Queensland with the announced shuttering of the Gladstone coal generator in 2029, although these states have more time to prepare.

The report is a compilation of recently released submissions, assessments and rule change requests, many of which have been reported on by Renew Economy, and include its wish for 5-year notices for coal closures, and the warnings of the high number of directions that may be required.

It’s part of the extraordinary amount of engineering work that is being undertaken to allow for the high renewable grid that are essential if Australia is to meet its 2030 targets, and then its 2035 targets.

Australia will be the first grid in the world to reach such levels, and to run “engines off” if that is required. It comes amid lively debate in energy circles about the technology and engineering required, and the big push from local networks to have a greater role in the transition.

The report also canvasses the technologies that can, and might one time, deliver all those critical system services, including system strength and fault current, black start capability, and the roll of consumer energy resources and the implications of more data centres.

Indeed, AEMO warns that more rules will be required to manage the large loads of data centres and their potential for sudden changes which could cause massive headaches for the management of the grid.

“The report outlines the steps required to replace the system security services provided by coal plants that are retiring and unlock the growing potential of renewable energy, including rooftop solar, to help deliver a smooth transition for consumers,” AEMO CEO Daniel Westerman said in a statement accompanying the report.

“New investments and reforms are needed to maintain system security in advance of these transition points, with opportunities to co-optimise both reliability and system security investments to help keep costs as low as possible.

“Industry and governments have actions underway to manage the identified transition points. AEMO will continue to work collaboratively to signal and support the required investments and reforms needed to maintain system security.”

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