Energy transition has only just begun, but solar has already changed the game

So much has, is and will be written about Australia’s energy transition and the speed with which wind and solar farms are being built, and consumers – both household and business – are adopting rooftop solar.

It all points to a rapid change in Australia’s energy mix, with forecasts suggesting the country will likely get to a 50 per cent share of renewables by 2030, and the likes of AEMO highlighting the massive shift from centralised to distributed generation (solar, batteries and electric vehicles), with a potential seven-fold increase in rooftop solar possible by 2040.

Exactly how this transformation is managed is the subject of intense debate – from AEMO’s Integrated System Plan, to various private and university analysis and predictions, to warnings from the incumbents and all the way to scare campaigns from the conservative ideologues who don’t think it should or can happen at all.

Into this debate has landed a unique 500-page report card – the Generator Report Card – that maps the history of the National Electricity Market since its creation two decades ago, along with some observations and warnings about the hurdles ahead.

It is published by Global-Roam, the Brisbane-based data wonks and market analysts who provide the popular NEM-Watch widget and who write from time to time on the website Watt Clarity.

It is, literally, a mine of information – including, for instance, detailed analysis on the output and performance of every single generator in the National Electricity market (barring rooftop systems and other distributed resources), and observations on how the market has changed.

And there is no doubt it has. But the overwhelming observation, in historical context, is that this is just the start of the transition.

As the authors observe: “The fuel mix is at the start of a massive transformation,” and this graph above shows that in historical context, the increase in wind and the new arrival of solar has barely registered.

It notes that 4,000MW of new (large-scale) renewable supply has entered the market, and about 4,000MW of coal capacity has left. But there is still some 23,000MW of coal left in the system.

“All of this coal plant will be closing in the years ahead,” it says. “For several reasons it is highly unlikely that this capacity will be replaced by new coal fired generation.” Some would say there is zero chance, barring heavy government intervention, subsidies and indemnities.

This report is so chock full of details that it is too much to cover in one article. More stories will inevitably emerge over time as we digest the data-rich pages, but here are some initial observations that leapt to our attention.

One graph that struck RenewEconomy illustrated the impact of rooftop solar, which readers will know has already grown to a small but statistically significant share of overall generation, but which has had its biggest impact on grid demand, as much of it is used by the consumer itself.

This graph (above) shows the fall in overall grid demand, partly driven by rooftop solar, but also by greater efficiency, offset more recently by investment in energy hungry LNG plants, and perhaps disguising an increase in underlying demand by the solar households enjoying cheaper power.

The authors note that it would be unwise to make assumptions about where demand is headed in the future – particularly given the lack of visibility over DER (which AEMO is now trying to address), and the likely rapid uptake of electric vehicles.

Another of the interesting observations is that the number of coal trips in the NEM – a source of consternation for the market operator and analysts alike – are actually significantly lower than the were a decade ago.

In fact, over the last five years, they have been reasonably consistently inconsistent at around 200 trips a year (down from a peak near 300 in 2004, and between 2007 and 2009). The problem is that many of these trips occur in the summer heat, when the ageing coal generators are both more vulnerable to breakdown, and more crucial to keep the lights on.

This is the principal concern for AEMO, which has won approval to continue its reserve trader mechanism to ensure the lights can be kept on during these events.

Interestingly, the authors also note that despite the trips, the number of occasions where frequency is also found off-course is now at lowest levels, most likely due to the Tesla big battery at Hornsdale, and other more recent battery installations. It seems the Tesla big battery is busy covering up the failings and vulnerabilities of incumbent generators, as we have noted here.

It notes also how the generators have responded to “manage risk” (some might say to game the market), with a change in bidding patterns. This is particularly seen in the amount of capacity that is now bid at the high end of the market, an observation shared by AEMO’s recent quarterly reports.

The report also captures the growing schism that has emerged in the NEM between the traditional generators and suppliers, and a conventional view of the world, and the new entrants, mostly variable wind and solar plants.

It is interesting to note how the report describes it as an “us and them” schism, likely reflecting the intense debate within the industry, and its critical view of state-based renewable schemes and “anywhere, anytime” installations, and what they see as the lack of focus on the “keep the lights on” bucket.

It makes the point, as AEMO and various network owners have recognised through the ISP, that future developments will need to be more geographically diverse, and possibly within defined renewable energy zones.

It also makes some observations about the “anti-correlation” of wind and solar, and says it has not seen strong statistical evidence to support the idea that “it’s always windy or sunny somewhere in the NEM”.

Sometimes, it notes, it does occur, as it did in February when the sun shone as the wind output died down, and vice versa. But the report’s authors say they are yet to find data to confirm that this is true as a whole. At the same time, it notes that the country’s use of storage, despite the share of renewables rising to 20 per cent country-wide and 50 per cent in South Australia, has barely been used.