Good news and bad for solar farms as AEMO reverses some transmission losses

The Australian large scale renewable energy sector can by and large breathe a small sigh of relief after the release of the latest marginal loss factors (MLF), which calculate transmission losses, but the good news is tempered by the fact that the reprieve is driven largely by a substantial fall in new investment in large scale wind and solar across the country.

The Australian Energy Market Operator this week published its final MLF assessments for the 2020/21 financial year and the news – overall – is good. Most operating solar farms have had their MLFs increased, as have the majority of wind farms. Some still suffer downgrades, but not as great as they were advised in the draft document less than a month ago.

But the reasons point to greater issues afoot for the renewables industry. AEMO says the upgrades are largely due to two reasons – the pipeline of new projects is drying up, as the industry has foreshadowed, and emerging “system strength” issues have caused the output of some generators to be deliberately wound back in certain conditions.

The most dramatic reappraisal in the final assessment was for the 50MW Broken Hill solar farm, owned by the Powering Australian Renewables Fund (PARF – a joint venture of AGL and the state owned Queensland Investment Corporation), one of five solar farms that have had their output cut in half because of fears of uncontrollable oscillations in the West Murray region of the grid.

The Broken Hill solar farm was advised in early March that its MLF would be further downgraded from 97.89 in 2018 and 0.75 in 2019 down to 0.70 in the coming financial year. That would mean it would get revenue for just 70 per cent of its output, which has already been cut in half by other constraints.

The latest assessment allows a reprieve, with its MLF boosted to 0.7844, a significant reversal from just one month ago. The other heavily curtailed solar farms – Bannerton, Weman, Karadoc and Gannawarra , all located within Victoria’s so-called “rhombus of regret” (due to the shape of the local grid) – still suffer downgrades, but not nearly as much as advised a month go.

Other solar farms in the south west of NSW also get a reprieve. A downgrade for the Griffith solar farm is reversed, the Parkes solar farm is still downgraded but not nearly as much as before, and the Colleambally and the Finley solar farms get an upgrade.

Almost all of the 23 large scale solar farms in Queensland received an upgrade in MLFs – some of them substantial – with the exception of the Oakey Creek solar farms (1 and 2) and the Sun Metals solar farm, which both suffered minor downgrades.

AEMO said in a statement accompanying the revised calculations that the changes for 2020/21 were smaller than those seen in preceding years “due to a slowdown in new project development and additional network constraints, both of which have reduced the need for MLF adjustments.”

“System strength limits in north-west Victoria and south-west New South Wales (collectively referred to as West Murray), and in northern Queensland have been included in the MLF study, to better reflect the forecast operating conditions of impacted generators.”

It should be noted that the constraints referred to by AEMO for the West Murray region do not refer to the restricted output for the five solar farms affected by the threat of “oscillations” in certain contingencies, such as the lost of a key transmission line.

The MLFs – and the manner in which they are calculated – have become been a source of great controversy in the industry, and cited as one of the main impediments to new investment, along with changes to connection rules, overall grid congestion and the lack of co-ordinated policy.

Those blockages are now being reflected in the sharp slump in investment identified by the Clean Energy Council, independent analysts and now AEMO. It’s also affecting existing generators that have been operating for than a decade, which many say is unfair.

An attempt to have the MLF changed to an “average loss factor” – which proponents said was fairer and more predictable, while still providing a “locational signal” was rejected by the Australian Energy Markets Commission.

AEMO said in its MLF market update that it remains committed to providing the market with as much transparency as possible about where new generation is expected to connect to the grid, publishing indicative MLF updates more frequently to assist in identifying changes and trends.

It also said it will work with industry and the AEMC on possible options to reduce the impact of large year-on-year changes.

“Please note the forecasts do not factor in any impact the COVID-19 pandemic may have on the economy and energy sector,” it added. This refers to the potential of significant loads being reduced if industrial activity is curtailed. That will have a spin off impact on MLFs, worsening them more in some areas.

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