Solar farms to carry cost of Territory government's glacial pace on grid reform | RenewEconomy

Solar farms to carry cost of Territory government’s glacial pace on grid reform

New performance standards set to be imposed on NT generators, raising costs for solar developments, after NT government delayed reforms.

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The Utilities Commission of the Northern Territory has hit out at the NT government for taking too long to implement crucial reforms to the NT’s electricity regulations, saying the introduction of tough new rules for generators could have been avoided if the NT government had acted faster.

The Territory’s Power and Water Corporation has proposed the introduction of highly controversial new rules for generators in the NT, including the strict new Generator Performance Standards that will largely burden new large-scale solar projects, forcing most to install individual batteries.

The Utilities Commission – the local regulator – largely endorsed the PWC’s proposal, but conceded that it was likely the least efficient outcome, but that the PWC effectively had no choice due to the lack of action by the state Labor government.

That will be of little satisfaction to the handful of large scale solar generators, who have been  highly critical of the new GPS because of the level of control that they would place on the operation of projects.

As reported previously by RenewEconomy, the new rules would effectively mandate that solar projects built in the NT would need to be accompanied by battery storage, large enough to supply up to 80 per cent of the generator’s output for a period of 30 minutes. Most local experts had pushed for a centralised battery which could have addressed most or not all of the problems, but there was no political support.

Solar project developer ENI Australia make a strongly worded submission in response to a draft determination in January, which criticised both the cost impact of the proposed Generator Performance Standards, and the consultation process itself which it said did not adequately take into account the concerns raised.

“We note that it is not the job of Generator Performance Standards to ensure a power system has adequate supply of capacity, energy or storage going forward,” ENI Australia said.

“If a shortfall of capacity, for example, presents itself in the [Darwin-Katherine Interconnected System], it is the proper task of government policy to provide the right market or structural incentives to fix. Using technical regulations to solve perceived failures or shortcomings of commercial or market arrangements sets a very dangerous precedent.

“We believe both the Utilities Commission and PWC should instead conduct a genuine consultation process and properly consider alternative measures to improve power system reliability with greater solar input that have much lower cost,” ENI Australia added.

The Utilities Commission responded to some of this criticism by saying that generators would have the option of negotiating a different level of performance standard if a power station operator was able to demonstrate that it would not have a detrimental effect on the energy system.

“However, as stated in the Draft Decision, the framework does allow for generators to negotiate alternate performance standards if they can demonstrate that adopting those standards does not adversely affect power system security or the quality of supply to Territory electricity consumers, such as a central battery if it makes commercial sense to do so,” the decision paper says.

But in making a final decision to introduce the new standards, even the Utilities Commission recognised that it was unlikely to be the most efficient outcome, and cited the alternative of a centralised battery system within the Darwin-Katharine system as potentially providing a better alternative to mandating generators install their own individual batteries.

“The commission acknowledges the feedback from generators that the capacity forecasting requirements in the GPS will significantly increase solar generators’ costs and thus deter investment, and that it does not explicitly provide for arguably more efficient solutions to address system security and reliability concerns, such as the provision of a central battery,” the Utilities Commission says.

“Further, the commission acknowledges that there may be more efficient solutions than that required under the automatic standards in the GPS.”

The Commission took the chance to criticise the slow response from the Northern Territory government, saying that the current situation that has necessitated the introduction of Generator Performance Standards could have been avoided if the Government had moved more quickly to implement important reforms.

“The commission notes that the Territory Government has been contemplating further electricity market reforms for a number of years that, if committed to and implemented prior to this point, may have alleviated at least some of the issues now being faced by the industry,” The Utilities Commission says in its final decision.

“Notably, the Territory Government commenced consultation in early 2019 to determine the form of a potential reliability standard, which is necessary to ensure there is an independent, objective way to determine whether the combination of generating units is sufficient to meet the desired standard for customers. The commission is not aware of any progress made in relation to this matter.”

The commission noted that the current Network Technical Code, which outlines a series of ‘technical requirements’ that generators must adhere to as a condition of operating within the Northern Territory’s electricity system, had been initially developed with a gas-fired generator fleet in mind.

With the emergence of low cost solar power, the characteristics of the NT’s electricity supplies are undergoing a fundamental change with a transition to new technologies. NT Power and Water estimates that around 60MW of new solar capacity will be connected to the Darwin-Katharine grid over the next 12-months.

There is less growth in solar generation in the Alice Springs grid, which however already hosts a significant amount of solar generation capacity.

NT Power and Water used this fact to argue for the introduction of Generator Performance Standards, which would now apply to all generators within the NT system above 2MW.

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