Broken Hill fiasco shows why we need to rethink the grid, and turn it upside down

The iconic mining town of Broken Hill should have everything it needs to provide electricity to its residents and industries.

Once, it did. The Central Power station supplied the region’s famous silver and zinc mines for half a century before being closed when the town was connected to the main grid. The facilities have since paid host to George Miller’s Mad Max: Fury Road, where finding fuel and power might have seemed as hard as it did in Broken Hill this last fortnight.

Broken Hill is now dependent on the long transmission line that connects it to the rest of the main grid, and it even has a huge wind farm, a large solar farm and a big battery to complement the diesel generators – themselves half a century old – that sit (supposedly) on standby.

But two weeks ago, everything went wrong. A huge storm blew down seven transmission towers, cutting the town off from the grid and leaving it to its own resources – which didn’t come up to scratch.

One diesel generator was out of action, the other one wouldn’t work, and the big battery had its settings altered so it also had to sit idle, which meant the wind farm and the solar farm could not help either. Households, unless they had their own battery, couldn’t even use their own solar.

Power finally came back on after 48 hours, but it was off and on for most of the week because the diesel generator was unable to cope with the scale of demand on the local grid, and the changes of both demand and the variability of PV.

It finally settled down once the battery had been enabled, some 10 days after the storm hit, but in outlying towns the emergency gen-sets kept on tripping. Homes and businesses were told to keep their rooftop solar turned off.

Transgrid, the company that owns the transmission line and is responsible for the back-up supplies, has been the centre of attention and has copped most of the flak. It has been racing to rebuild the fallen transmission lines and reconnect the town, which it managed to do on Thursday night, almost a week of ahead of schedule.

That’s a fine achievement. But many locals think the whole thing has been a fiasco – causing immense frustration and stress, huge losses of food-stock and other perishables, and bringing local industry to a halt.

No doubt the blame will be sheeted down to a series of bad decisions, some of them individual. But for many in the energy industry it is much more than that, and symbolises what is fundamentally wrong about the energy market in Australia: It doesn’t much care about the consumer.

They argue it is time for a complete rethink of the grid – not just the tinkering at the edges that are the product of endless inquiries. They say we should start over by focusing on what the consumer actually needs and wants, and work upwards from there, rather than the top down approach favoured by regulators, rule makers, market operators, utilities and retailers.

Muriel Watt, an energy expert with ITP Renewables, says Australians now own their own solar, are installing batteries at record numbers and are making the switch to EVs. In time, they will own most of the assets supplying the main grid, but they have little say – and are paid little regard – because of the obsession with and priority given to centralised power.

“We have to turn this on its head,” Watt says. “Look at rooftop PV, for instance. They are not rethinking it, they can’t understand what customer focus is, they just kept talking about orchestration and curtailment. They never understand how to do that from the customer point of view.”

Watt argues that the electricity system needs to be rebuilt from the bottom up, starting with the consumer, and individual households.

“They are going to have their own generation, and their own needs, and their own energy management,” she says. “We could develop a system which is designed around customers and increasing levels of local rather than central generation.”

Watt says these could be achieved with what she calls local energy zones (LEZ), with control first at the customer level, second at the local substation level, the third at the regional node level and finally with the system operator only needing to manage the net supply and demand from those nodes.

Where appropriate, adjacent energy zones or nodes could be configured and operated to support each other, thereby smoothing out the load seen by upstream nodes.

Others have been thinking along the same lines, both here and overseas. This article in Vox, originally published in 2018, says energy systems will need to be reconceived and redesigned, because without change they could end up slowing down, and increasing the cost of, the transition to clean electricity.

It quotes Lorenzo Kristov, a long time principal at the California Independent System Operator (CAISO), saying that the rise of new energy technologies should lead to a step back and a fresh, holistic perspective – and not just a reactive scramble on policy, which Watt argues has been the case in Australia.

• Watt says rethining the grid from the ground up, will empower rather than alienate customers as renewable energy increases, and boost resilience – which is even more important as the grid faces challenges from climate change and bushfires and storms.

It would also allow communities, investors or DNSPs to determine appropriate placement of energy zones and their generation and storage assets – rather than the centralised deeming of renewable zones that Watt argues has created as many problems than it solves, particularly with social licence.

In some cases it could be argued, this is already happening, particularly when the customers are powerful. The big mining giants who dominate the iron ore province in the Pilbara are working out how to decarbonise their operations, and in the case of Fortescue they want stop burning fossil fuels of any kind by 2030.

They are starting with themselves – the consumer. They are looking at what the townships need, what the mines need, the transport needs, and then building local solar and batteries and demand response, and building out from there.

Other big companies are following a similar path, in the sense they are building their own behind-the-metre facilities – where they can. These are all powerful organisations, and they are making sure the power remains, quite literally, with them.

No such luck for individual consumers on Australia’s main grid. For all the talk about the focus on CER (consumer energy resources) and putting consumers at the front of the transition, nothing much changes, and that’s because the main institutions that govern it are trapped within the system that they have created.

Energy consultant Gabrielle Kuiper says that the opportunities for DER and CER integration have been ignored. Partly this is due to politics, and the failure – or at least the refusal by the federal Coalition government – to co-operate on emissions reduction policies.

But it also stems from institutional failure.

“NEM institutions have prioritised industry needs over the public good and consumers’ needs,” Kuiper writes in a submission to the parliamentary inquiry on the energy industry.

“The governance, regulation, functions, and operation of Australian energy markets have been characterised by embedded gentailer industry influence (previously coal and gas focused), excessive industry profitability, and, until recently, little motivation of industry or the energy market institutions to assist decarbonisation.”

One example of this, she says, is the supply-side focus in policymaking, regulation and the operation of the market and the almost complete absence of demand-side in thought or action.

“As a result, Australia is a laggard in flexible demand, with the exception of ripple control of domestic hot water systems which were developed in the 1950s.”

Kuiper argues that all three of the major institutions have failed consumers. The Australian Energy Regulator because, among other things, it allows billions of “supernormal” profits to be pocketed by regulated utilities at the expense of consumers, and does little to address key voltage issues which have damaged consumer devices.

She takes issue with the Australian Energy Market Operator because of its lack of regard to demand side options, including and especially in its otherwise admired Integrated System Plan, and its brutal approach to rooftop solar challenges (introducing the solar switch off).

Kuiper says the Australian Energy Market Commission has failed consumers by delaying the creation of a body to set DER technical standards, which she says raises concerns about both the technical and engineering capacity of the rule maker in relation to DER/CER and the long time frames for rule making.

In evidence to the committee on Thursday, Kuiper said the bias towards the supply side still remains, and it is not clear that the regulator is taking is developing policy and advocacy on behalf of consumers.

Some energy retailers are trying to change. In an interview with the SwitchedOn podcast, Devrim Celal, strategy officer with Kraken, a UK platform championed by Octopus Energy, says retailers need to provide what the consumers wants, otherwise they will go out of business.

“Unless we build a new system where the consumer has an incentive to participate in helping balance electricity between when it’s abundant and not, then we’re walking into a major storm,” Celal says.

But how to build a new system?

In the Vox article, Kristov argues that most notable feature of LDO architecture (his equivalent of Watt’s Local Energy Zones) is that it flips a top-down system. That means that responsibility for electrical power — and with it, social and political power — goes downward to the local level, rather than concentrating at the top.

“Starting at the very lowest level, often behind the customer meter, each level will have a smart controller maximising its efficiency and self-reliance. Only to the extent that it is unable to provide for itself will it seek power from the next level up,” the article says.

“At that level too, a smart controller will be optimizing all its varied resources, seeking efficiency and self-sufficiency. Only to the extent that it is unable to provide for itself will it seek power from the next level up. And so on.

“This architecture puts local DERs, at the bottom edge of the grid, first in the priority stack, ensuring that they are optimised and fully utilised before any LDA requests power from the transmission system. Big, centralised power plants become the last resort, not the first.”

Watt advocates a similar model, and notes that it may mean that the system needs less centralised generation, and less generation than is generally thought. “The whole Broken Hill saga is exactly what I had in mind when thinking about this.”

And in Australia, that is doubly important. The country has a long stringy grid vulnerable to the increasing intensity of natural disasters – whether they are fire, flood or storms.

In a manner that has given no regard for the consumer, the people of Broken hill have had an energy transition thrust upon them, from the time the state government decided it would – whether it liked it or not (and many didn’t like it at the time) – be connected to the main grid.

Since then, they have had little say in what it should look like or how it would operate, and it’s led to higher bills and less reliability. It has had wind farms and solar farms and big batteries built, but when it really counted they were useless, and the last people they served were the consumer.

Watt says the thinking hasn’t really changed, and shows little sign of doing so. What’s more the constant reference to centralised baseload, and the push for nuclear has “nothing to do with the market, and nothing to do with the consumer.”

Even in Broken Hill, reliable power was only resumed when the transmission line was rebuilt. Local resilience was ignored. It wasn’t quite the dystopian vision of Mad Max, but for some it might have felt it wasn’t far from it.