Solar driving “paradigm shift” in electricity grid, says new AEMO boss

The new head of the Australian Energy Market Operator has noted the “paradigm shift” in Australia’s electricity grids as a new report predicts that large and small scale solar will deliver 40 per cent of Western Australia’s generation capacity within the next decade.

Daniel Westerman, in his first public comments since assuming his role as CEO and managing director of AEMO a month ago, said the “profound transformation” in the grid presented both “exciting opportunities” and new operational challenges.

“This is a profound transformation that calls for the highest levels of collaboration across the WA energy system – amongst market bodies, policy makers, industry participants and consumer groups,” he said in a statement.

Westerman’s comments came as AEMO released its annual Electricity Statement of Opportunities report for the WA wholesale electricity market (WEM), which noted that despite the impending closure of two coal units totalling 388MW in the next three years, there is no forecast shortfall of supply in the next decade.

The report notes that rooftop solar – already the largest energy source in terms of installed capacity in the state – is expected to grow by eight per cent, or 219MW, a year and reach 4,069MW by 2030/31. In the last year it added 336MW to reach 1,740MW.

The impact of this rooftop solar is so profound that AEMO is now less concerned about managing demand peaks as it about managing demand troughs, particularly in an isolated, stand-alone grid like the WEM that has no connections to other regions.

So called “minimum demand” – the amount of electricity demand from consumers minus the supply of rooftop solar at any one point in time – is expected to fall from the current record low of 954MW to 232MW by 2025/26 (or even lower to 176MW in one scenario).

That presents challenges for the market operator, and AEMO’s manager in WA, Cameron Parrotte, says this will require “innovative solutions” to ensure that voltage, system strength and inertia are maintained. That means new standards new system services and new regulatory arrangements.

“As the energy transition unfolds, AEMO is committed to working collaboratively wit stokeholds and implement te WA government’s energy transformation strategy, to ensure WA households and business are the beneficiaries of secure, reliable, affordable and sustainable energy,” Westerman said in the statement.

The shift to embracing the challenge and opportunity of rooftop solar – rather than just focusing on the downside – is a marked change from previous years, when incumbents sought only to demonise the technology.

Some still do, such as the former head of one fossil fuel lobby group who lamented recently that Rooftop solar is a populist Frankenstein. But politicians, and more importantly operators, engineers and network owners, now realise that the technology is both popular and delivers a good return on investment, and is unstoppable.

But while WA energy minister Bill Johnston describes rooftop solar as an “amazing opportunity”, and not a problem, many in the industry are frustrated about what they see as the slow renewables transition of the grid in Western Australia.

Some 640MW of large scale wind and solar have been added to the WA grid in the last 18 months, after a near four year investment drought, but prospects for much new large scale wind and solar generation are poor, given the network constraints that have yet to be resolved.

Ironically, the state Liberal Opposition suggested a target of 100 per cent renewables by 2030, but Johnston led the campaign against that idea, saying it would cost $16 billion. A newly released analysis commissioned by the government found that such a rapid transition would cost $15 billion, but some experts question many of its assumptions.

As for rooftop solar, the ESOO report notes that it is continuing to push the demand peak further into the evening from the 5.30 to 6.30pm period to the 6pm to 7pm period. Peak demand used to occur in mid afternoon.

Rooftop solar will also reduce overall consumption by 0.8% a year, double the reduction of previous estimates, and could even reduce overall consumption by as much as 2.6% a year.

But it’s the individual, one-off events that worry AEMO most, particularly those that raise questions about the reliability and dependability of the major fossil fuel generators and their ability to respond to sudden changes in the grid.

The ESOO report cited several events, including on December 8 last year when – amid tight supply conditions – two large-scale generators went on Forced Outage due to failures following a request to start up, joining another large-scale generator already on Forced Outage for the same reason.

“This sequence of events did not lead to a supply shortfall, because the forecast peak load was lower than anticipated. However, it does highlight an increasing concern in managing operational challenges,” the report said.

During a four day heatwave from January 5 to 9 this year, the grid lost three major coal units and a big gas unit over two days amid high demand, and as bushfires and thermal constraints limited the ability of some generators to export power. AEMO managed to avoid any forced load shedding.

Other problems emerged when cloud cover forced the sudden reduction of 300MW of rooftop solar output in 30 minutes (on March 21), pushing frequency down to low levels as if a major generator had tripped.

AEMO also notes that large amounts of rooftop solar PV can trip due to system disturbances, which is one reason why new tighter standards for rooftop solar PV inverters are being introduced.

Because of these events AEMO is looking forward to the likely construction of two big batteries in the WA grid, a 100MW/200MWh battery at a former power station in Kwinana, and another 100MW battery at Wagerup. It is currently looking at market rule changes to facilitate the proposed investments.