New wind and solar improving grid reliability and lowering costs, AEMO says | RenewEconomy

New wind and solar improving grid reliability and lowering costs, AEMO says

AEMO says all states expected to be within new reliability standard this summer thanks to new wind and solar capacity, but catastrophic events still a risk.

Murra Warra wind farm.

The addition of more than 4 gigawatts of new wind and solar capacity since last year means that Australia is unlikely to breach its reliability standards this summer, despite the increasing fragility of its ageing coal fleet, according to the Australian Energy Market Operator.

The prediction is made in AEMO’s Electricity Statement of Opportunities, an annual document that seeks to identify investment opportunities but which has become more popularly known as the “blackout” report in recent years because of its warnings of potential shortfalls and the headlines that creates.

In the coming summer of 2020/21, however, the main grid is expected to meet the reliability standard, even though it has been tightened significantly from a target of Unserved Energy of 0.002 per cent to a new target of just 0.0006 per cent. And new wind and solar is to thank for that.

“AEMO’s latest analysis observes an improved reliability outlook across the next few years driven by the rapid development of distributed and large-scale renewables, increased transmission capacity and reduced peak demand,” it says in a statement accompanying the report.

Some 4.3 megawatts of additional new wind and solar capacity will be operational this summer – compared to last year – and even if some of 1.9GW currently held up by connection delays in Victoria is not delivered on time, the reliability standard will still be met.

“It is great to see how industry’s investment in new resources improves the reliability outlook for this summer,” CEO Audrey Zibelman said in the statement.

AEMO, however, does not rule out the risk of load shedding this summer, saying that extreme events, including storms and bushfires, and the declining reliability of the ageing coal fleet, will carry risks. “Thermal generation reliability continues to decline, increasing uncertainty around its availability when most needed,” the report notes.

For this reason, AEMO will continue to purchase capacity under its reserver trader mechanism, which much of this focused on “demand response” initiatives, where energy consumers get paid to reduce demand at key times if the supply equation becomes tight, including with virtual power plants which link and co-ordinate the distributed energy assets of individual householders.

But Zibelman says that while AEMO will seek more than 1600MW of RERT this year, in case of a dramatic network or generator failure, it will not cost anything unless deployed. “We only pay for them if we actually use them,” she told RenewEconomy. This meant that renewables, apart from bringing down wholesale prices, were also lowering the costs of reliability.

Over the next decade, South Australia – which will have reached its target of “net 100 per cent renewables”, is forecast to remain within the tighter reliability standards, (the interim reliability standard in grey dotted line in the graph above) as will Victoria, which has a 50 per cent renewables target by 2030.

NSW would have remained within the reliability standard without new investment on the old measure until 2029, but under the new IRM it will require some added capacity to replace Liddell, which will close its last unit in early 2023.

AEMO puts this extra capacity need at around 150MW in 2023, and much of that will be met by the new battery storage initiative announced by the state government. Future capacity needs will likely come from the new renewable energy zones proposed for the central west and New England areas.

“In future years, the declining reliability of the aging coal fleet and scheduled plant closures contribute to projected increases in unserved energy, particularly in New South Wales (NSW), and to some degree in Victoria,: it says.

“Timely investment in transmission projects identified in AEMO’s latest Integrated System Plan (ISP), and projects such as those announced under the NSW Emerging Energy Program, will help address this risk.”

This graph highlights the role that technologies are playing in improving and weakening reliability. The red blocks are improvements, and are dominated by new DSP (solar and batteries), and new large scale solar and large scale wind. The black block is forced outages from mostly coal and gas generators which is weakening reliability.

Another issue on the horizon is the exponential growth of rooftop solar, particularly in states such as South Australia where it is predicted to push minimum grid demand to levels that AEMO says will be difficult to manage. By 2025, minimum demand is expected to switch from the night to daylight hours in all states, and it wants the power to be able to switch off rooftop solar as a last resort.

“As we continue to see the increasing shift towards non-traditional generators and the increasing take up of household rooftop PV, we are encountering new challenges of managing voltage, system strength, and inertia,” Zibelman said.

“With minimum demand carved out during the day, there’s an opportunity for innovative solutions and technologies to enter the market and utility-scale energy storage is likely to become increasingly important for daily operation.”

Another potential issue is the failure of a key piece of network equipment known as static VAR compensators (SVCs) in South Australia, which will restrict exports and imports on the main transmission link between Victoria and South Australia to 420MW for the next 12 months

AEMO acknowledge it has connection issues which has so far caused a delay to around 1,900MW of new wind and solar capacity, much of it in Victoria. It has modelled what would happen if half the 1,900MW of new wind and solar capacity was not connected by the summer, and a 50 per cent increase in the duration of forced outages, but USE still came within the new guidelines.

In a statement, federal energy minister Angus Taylor said the improved reliability outlook is due to lower forecast peak demand, minor generation and transmission augmentations, and significant development of large-scale renewable resources.

He said the need for Snowy 2.0 to boost reliability in NSW was clear – although AEMO says Snowy 2.0 will have a minimal benefit as long as new transmission lines are not built, the HumeLink transmission line has not yet formally received its regulatory approval. The proposed Project EnergyConnect link from South Australia was another important link that is also waiting for regulatory approval.

Taylor also called on the private sector to boost investment in dispatchable energy.

“The private sector also needs to step up to make concrete commitments to invest in new dispatchable replacement capacity.” Investors say the biggest obstacle to new investment is uncertainty caused by the federal government’s own Underwriting New Generation Investment scheme, which shortlisted 12 projects 18 months ago, and which is dissuading other investment while the program fails to move forward.

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