The biggest headache for grid operators has traditionally been around dealing with demand peaks, particularly if they lose some big generators, such as ageing coal and gas plants, due to unexpected outages.
But the problems of having too demand and not enough supply is now being turned on its head by the surge in production from the growing numbers of rooftop solar installation on Australian homes and businesses. It’s now often a question of too little demand, and too much supply.
The Australian Energy Market Operator has tried a bunch of different approaches, including the blunt instrument of simply turning off rooftop solar installations and the more user-friendly approach of “dynamic” exports.
More recently, in the now more frequent instances of “minimum system load” conditions, i has been forcing, or encouraging, the owners of big batteries to discharge their stored energy and stand by in case they are needed to charge up, and create demand for the stretched market operator.
The problem with this is that big battery owners are not so keen to do this. Some have agreed to contracts with AEMO to provide that service, but others, particularly in South Australia, have been forced to act after deciding that the contracts on offer were not attractive enough.
The Clean Energy Council, the renewable and energy storage lobby group, has now proposed a new approach to the problem, suggesting the creation of a new ancillary service that will provide a market signal for batteries to respond to minimum load conditions.
The CEC argues that the forced intervention doesn’t work because it may mean that big batteries with long term offtake deals or even “virtual toll” agreements won’t be able to meet the terms of those contracts.
And it also argues that alternatives such as don’t cut the mustard because they are too short term – usually 1 to 3 years – and not enough for a battery developer to get the project over the line financially.
“A tender system for MSL type 1 contracts is likely to result in poor price discovery and less efficient outcomes than that enabled under an open market ancillary services mechanism,” it says.
The CEC has asked the Australian Energy Market Commission for a rule change to allow the creation of the , which it compares to the recently created fast frequency market, which responds to the ability of big battery inverters to respond quickly to unexpected grid disruptions.
The CEC argues that the proposed rule change enables AEMO to better manage operational risks under MSL conditions.
“We also consider that an open, transparent market mechanism is likely to help reduce costs of
capital, relative to an opaque contracting mechanism,” it says. “This will flow through to lower overall
wholesale costs over time.”
It says relying on energy markets only isn’t feasible because of the thinness of the load-side of the market, especially scheduled, controllable load, which means they are not likely to be available when most needed
in the market.
“This is exacerbated in scenarios where the energy spot price signals may last for several hours. Early on, the energy spot price may inadvertently deliver needed load response, however towards the end of the MSL period this may no longer be the case.
It cites an example, where a 5-hour MSL event with a series of 2-4 hour storage responses may inadvertently manage the issue for the first 3-4 hours, but for the remaining hour could very well be insufficient.
“In relation to the energy market, the expectation is that at peak MSL period, wholesale market prices
will generally be expected to be negative,” the CEC says.
“This will naturally incentivise MSL enabled assets to increaseconsumption when called upon. This same energy price signal should also incentivise virtual power plant operators to increase grid-supplied consumption of aggregated load (for example, pool pumps or electric hot water).
“What the new MSL reserves market provides is the ability for AEMO to have increased certainty that periods of increased consumption can be dispatched by AEMO to align with trading intervals that best support power system security.”
If you would like to join more than 29,000 others and get the latest clean energy news delivered straight to your inbox, for free, you can click here to subscribe to our free daily newsletter.
