SA shows wind and solar make energy cleaner and cheaper

As Europe has looked towards its biggest and most successful economy Germany to lead the way into green energy, Australians are getting a glimpse into its own grid of the future in the state of South Australia – arguably the advanced economy with the highest wind energy penetration, and now with the highest penetration of rooftop solar PV, in the world.

The latest South Australian Electricity Report (SAER), released by the Australian Energy Market Operator last week, gives some fascinating insights into how wind and now solar PV are changing the nature of the local grid – and providing the state with cleaner, greener and cheaper energy.

For a start, in 2011/12, wind overtook coal as the second biggest producer of energy in the state. (The table above only includes plant registered in the National Electricity Market (NEM), so does not include rooftop solar PV).

But while solar PV is not included in that table, here’s another interesting set of statistics. South Australia has had the biggest reduction in energy demand compared to forecasts of just a year ago – down 10 per cent from last year’s predictions.

Industry demand has fallen, but it still represents growth of 5.4 per cent. The biggest change has been in residential demand, which has fallen 7 per cent. It just so happens that South Australia has the highest penetration of rooftop PV of all the NEM states, meaning – as AEMO states – that ‘”less electricity is being supplied from the grid.”

Indeed, by the end of 2012, one out of five houses in the state had installed rooftop solar PV – more than double the national rate – and its 267MW of rooftop PV systems installed by June 30 are estimated to have generated 306 GWh in South Australia, which is equivalent to 2.4% of South Australia’s annual energy.

This percentage is expected to jump to 3.4 per cent in the current fiscal year – rivaling Germany as the industrialized region with the greatest penetration of solar PV, and more than double Queensland (1.5 per cent for 2012/13) and more than treble NSW (1.1 per cent) and Victoria (one per cent). By 2021/22 the amount of rooftop solar PV in the state is expected to grow to 900 GWh, when it could be accounting for 6.4 per cent of the state’s energy. That is under AEMO’s moderate uptake scenario – experience suggests that official forecasts have always underestimated the rollout of solar PV – and its “high” scenario suggests the uptake could be 40 per cent higher.

Another interesting snippet from AEMO’s report is that rooftop solar – contrary to some opinion – is helping to meet peak demand. “AEMO estimates that 38 per cent of rooftop PV capacity installed in South Australia can be considered to be producing at times of summer maximum demand,’ it writes in the SAER report.

The “mass market” sector, which includes all users except large industrials, as fallen 7 per cent since 2009 – mostly because of rooftop solar and energy efficiency savings – and even under its highest energy predictions, does not return to the record high level seen in 2009–10 for at least 10 years. AEMO estimates that the fall in demand has pushed out the need for new power generation for at least five years – and possibly by a decade.

Indeed, the 540MW Northern and 240MW Playford brown coal fired generators are already both off line. It is often said that wind and solar have not caused the closure of a coal fired power station in Australia. Alinta, the owner of the two power stations, insists that the closures are not related to the carbon price , so reduced demand and prices (caused by the impacts of solar PV and wind energy) must be the only explanation. In reality, it is likely a mixture of both.

Oh, but doesn’t all this wind and solar make electricity prices more expensive?  South Australia has a lot of grid to look after, so transmission costs account for a significant percentage of retail costs (possibly a reason why so many have gone for rooftop solar PV). But South Australia has among the lowest wholesale electricity prices in the nation. Indeed, before the rollout of wind and solar PV in great quantities, it used to have by far the highest wholesale prices.

Another interesting statistic provided by AEMO is the amount of planned new generation plants in the state. In the last year, another three wind farm proposals, including REpower Australia’s Ceres Project, a 600 MW wind farm on the Yorke Peninsula, have been added to the list, taking the total amount of planned wind energy additions to around 2,500MW. But there has also been a 900MW reduction in the capacity of publicly announced proposals involving gas. AEMO said it has been advised that AGL Energy’s 750 MW OCGT Torrens Island C proposal, publicly announced in 2011, is now inactive or unlikely to proceed.

And, as this graph below shows, the addition of wind and solar has meant that the state has become an exporter of energy and reduced imports from Victorian brown coal fired generators. The flow of clean energy from South Australia could be higher if the interconnector between the two states was larger, but this has been resisted by the brown coal generators in Victoria, who fear a similar lowering of wholesale prices in their own market. AEMO said in its latest report that upgrading the interconnector could alleviate transmission network congestion and reduce high market-price events and facilitate more efficient generation dispatch in Victoria and South Australia.