South Australia swings from three days of 100 pct renewables to worst drought in 7 years

The case for more and longer-duration battery storage has been underlined by the events of the past 10 days in Australia’s most advanced renewables grid – which has swung from three days of more than 100 per cent renewables to its worst wind drought in seven years.

The events have sparked plenty of debate about the weather-dependence of renewables-dominated grid, although that argument sounds hollow when the heatwave in France forces the shutdown of some of its nuclear reactors, and unexpected coal shut-downs are considered the biggest risk to Australia’s grid in similar heatwaves.

In South Australia, its already sizeable gas fleet – largely built decades ago to support the state’s dependence on inflexible brown coal generation – was barely switched on last week as the state enjoyed strong wind conditions that provided an average of more than 100 per cent of local demand for more than three days.

But they were then fired up en masse to provide the bulk of the state’s generation from Sunday to Wednesday this week as wind experienced what analysts such Watt Clarity estimate to be the state’s worst four-day wind drought in seven years.

It is important to note that this did cause a rise in wholesale prices – gas is expensive – and higher emissions (gas is also dirty), but it did not cause any supply shortfalls, and there was no load shedding, even after the lower than average solar output closed down for the evening.

What it did underline was the need for more long duration storage, and more links to other states, which is no surprise to anyone in the energy industry.

Indeed, Australia’s largest transmision project to date, the 900 km long, 800 MW capacity Project EnergyConnect connecting South Australia to NSW and Victoria is designed to do exactly that – once its delayed construction and commissioning is completed next year.

It has, unfortunately, been undersized at 330 kV instead of 500 kV, but it will deliver a second link to South Australia’s grid, which has been sitting alone at the end of a long, extended line, and include it in a loop with neighbouring states, enabling it to import more when needed and export more at other times.

The greater export capacity will allow more wind and solar to be built in its own state, with reduced fears of constraints, and there are a number of new projects timed to be exactly that, including Goyder North, Palmer, and Carmody’s Hill, as well as several solar and battery projects.

The second thing is the need for more storage. South Australia is the home of the first big battery in the world, the Tesla big battery at Hornsdale, and currently has nine operating big batteries, but none delivering more than two hours of storage.

That is largely the function of the nature of the market – and the immediate need to provide frequency control and system security, and a little bit of arbitrage.

But the new fleet of new batteries that is now being built average more than four hours of storage, with another six winning contracts last month to deliver eight hours of storage in exactly the circumstances experienced in the last week.

See: Big batteries scoop the pool in grid firming tender that was also open to gas generators

The state government wants more – particularly given the failure of a handful of potential pumped hydro projects prove their economic worth – and will be holding more tenders to attract more long duration storage, and possibly flexible gas to replace some of the oldest units currently in the grid.

The Australian Energy Market Operator says the country needs about 17 GW of flexible gas – it has 13 GW of gas capacity but some of this is old and not very flexible – to manage such events.

The prevalence of shorter duration storage batteries in the South Australian grid over the last few months has meant many have been caught short at critical times, leaving the market bidding to be dominated by the small cartel of peaking gas and diesel generators.

The Australian Energy Regulator highlighted in a recent report how two days of extreme heat in South Australia left that state exposed to high wholesale prices, partly because the state’s existing batteries ran out of charge and weren’t available for the unexpected morning demand peak.

Just those two days of high wholesale price peaks were enough to push the quarterly average price up by 50 per cent over what it might have been, and to the highest in the country.

The same thing happened earlier this week, as Renew Economy editor Sophie Vorrath wrote about what was then the worst two-day wind drought in two years which pushed wholesale prices through the roof.

David Leitch, ITK principal and co-host of Renew Economy’s weekly Energy Insiders podcast, wondered about some of the bidding strategies of the batteries during this week’s wind drought. He discusses it in the latest episode of the podcast and provides the graph above.

“It looks like South Australian battery owners refused to pay to recharge the other night,” he wrote on LinkedIn. “For all I know they may have been so instructed, equally some battery owners might have other assets that were suited to a price spike.”

Which is true, as many of the battery assets are also owned or operated by the owners of thermal generators, and some of the other independent owners just want to make money.

Geoff Eldridge, from GPE NEMLog, also wrote about the four-day wind drought, which he says had wind – as a share of consumption – at the lowest level in eight years.

“The useful lesson is not that low wind alone creates stress, but that scarcity appears when the replacement stack, including gas, imports, batteries, solar, rooftop PV and demand response, has to carry more of the system for longer,” he writes.

“South Australia is often treated as an outlier in the NEM. In some ways, that is true. It has moved further and faster into high renewable operation than the larger mainland regions.

“But that also makes it useful.

“SA shows system-design questions earlier because it has less conventional generation masking the shape of high-renewable operation. Other regions still have coal units providing a large amount of hidden flexibility: energy, ramping, reserve depth, system strength and confidence during multi-day weather events.

“That gives the June event a wider significance:

• SA is not just a local case study: It is a preview of the questions other regions will face as coal retires.
• Coal still hides some flexibility questions elsewhere: NSW, Queensland and Victoria may appear less exposed while coal units remain in service.
• The lesson is not anti-renewable: It is about the flexibility, diversity and duration needed around renewables.

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