The missing pieces from AEMO's big energy transition plan | RenewEconomy

The missing pieces from AEMO’s big energy transition plan

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If the grid valued environmental outcomes there wouldn’t need to be so many different scenarios in AEMO’s Integrated System Plan.

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AAP Image/Darren Pateman
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The new Integrated System Plan produced by the Australian Energy Market Operator is at once the successor to the RIT (regulatory investment test), and a symbolic map.

The most important point to understand about the ISP is its legal status. Here we can do no better than quote from the press release.

The Energy Security Board (ESB) is finalising a detailed policy design and regulatory framework to facilitate the execution of the actionable ISP with a view to implementing the revised framework by June 2020. PAGE 3 OF 3

The intention of an actionable ISP is to streamline and simplify the RIT-T and post RIT-T regulatory approvals.

The role of RIT-T moving forward will be reduced to looking in detail at engineering aspects, refine costs, consider alternate non-network options, and staging.”

The ISP will legally drive transmission, but only hypothesize about generation

Without a carbon reduction objective, all of the ISP modelling is built on assumptions about future generation. In some ways that’s why so many scenarios are required.

In addition there are assumptions built into the ISP like Queensland’s 50% renewable energy target that many participants would still feel cautious about.

The thinking underlying the ISP misses at least one key foundation

Decarbonisation of electricity in Australia involves 4 key pieces and each one takes longer than the next.

A: Building wind and solar to supply bulk energy. 90% of the fuss is about wind and solar (VRE). That’s the easiest and fastest bit of the job;

B: Building sufficient low carbon dispatchable/firming balancing power. Physically, this takes longer and the market structures required are tougher. Demand response and efficiency fit in here.

C: Building the transmission. This is, of course, where the most policy progress is happening, but desperately needed projects are still stuck in the AER RIT process being assessed by bureaucrats who in the end are not in a position to really add value.

D: The control systems. A high VRE grid with high DER is going to have low physical inertia. ARENA, AEMO and Australia’s power engineering community appear to have fallen far behind in keeping up with the rapidly developing use of power electronics to control system strength, manage voltage, fault current and reactive power in the new order.

As far as I can tell, and despite the fantastic background of many people in the ISP planning process, I can’t see anything in the ISP that takes an appropriate view of the massive changes in control systems required in Australia’s transmission and distribution.

This applies right down to everyone’s household system. AEMC’s “power of choice” system has resulted in a lower penetration of communicating meters than there should be, just for starters.

There is a lot of work with long lead times required here, perhaps even more than in transmission and yet if it isn’t done the whole transition is at risk.

The transmission system at a glance
Figure 1Source: ISP

No project has yet fully emerged from the RIT process and subsequent AER review. In short transmission timing  is still a risk for Victoria and NSW even if that risk is diminishing.

There is still literally thousands of megawatts of generation in Tasmania and NSW that won’t get into Victoria if big coal generators fail in that State in the March quarter. Medium term though its NSW that remains most at risk.

Figure 2 Source: ISP
About REZ – Winners and losers

In our view the ISP is quite pessimistic about renewable energy zones. For instance, it says that the New England, NSW zone where there are just 300MW of exist spare capacity isn’t needed until 2036. That’s not going to comfort developers such as Walcha Energy.

This list of winners and losers can be extended but focusssing on the winners.

Figure 3 REZ winners. Source: ISP
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1 Comment
  1. Peter Farley 2 weeks ago

    While we can differ about the need for various technologies, there is a real risk of over investment in electricity infrastructure which the RIT-T process tries to guard against.

    A combination of reasonable progress on energy efficiency and rooftop solar should see NEM grid demand fall 1.5-3% per year for the next 10-20 years even if electrified transport becomes the norm. It is not reasonable to forecast a fall in rooftop installations. We have only installed about 5-7% of the theoretical rooftop solar and if we add carparks, railway platforms etc etc we can probably increase behind the meter generation by at least 12-15 times.

    Therefore it is just as important that the economy is not burdened with paying for stranded assets in storage and transmission as in stranded coal and gas plants.

    If a wind or solar farm is badly designed or sited the owner foots the losses. Transmission and distribution investment is always funded by customers for 30 or more years even if its capacity is only used 10% of the time, and in the near future T&D will cost as much or more than energy. Therefore it is doubly important that transmission investment be tested thoroughly by the regulators.

    Long distance energy transmission in Australia is falling rapidly 34% since 2015 and the MLF process for all its flaws will force developers to favour locations where transmission capacity is still available, e.g. on the roof and in existing coal provinces while flexible demand and relatively small investments in double ended storage will further reduce peak transmission loads.

    In the last year the 450 MW basslink has averaged 52% capacity, the 850/750 MW of Vic/SA transmission has averaged 31%. Queensland NSW is a bit higher but trade between NSW and Victoria has fallen from 5,700 GWh in 2016 to 1,200 GWh in the last 12 months. The ongoing renewable installations in NSW will produce about double the output of Liddell by 2022 so it is difficult to see NSW importing more power than it did in 2015 across the existing interconnectors, even it closed Liddell and another 500-800 MW of coal.

    In 2021 Victoria can expect its trade balance with SA and Tasmania to move toward net imports by about 1,500 – 2,000 GWh per year along the existing routes without going anywhere near overload. Its own renewable installations will add about the output of Yallourn, so the combined effect will mean that imports from NSW will fall to trivial levels and Victoria will have a surplus of about 10,000 GWh per year to be shared between reductions in gas and coal and increases in exports to NSW. As we have noted, in the past exports to NSW were more than 8 times current levels so there is plenty of transmission capacity.

    Even on the question of reliability through redundancy it is difficult to justify more than token upgrades compared to flexible demand and end user based storage. Based on actual numbers already achieved in SWPP, PJM, CAiso, Nordpool and other grids we should be aiming for 4-6 GW of demand response which will be less than a 10th of the cost of new transmission.

    In summary the Rit T process is saving the country billions in wasted investments. Just to further illustrate how uneconomic new transmission is, the NSW and Commonwealth governments have to pay 2/3 rds of the cost of the minor upgrade to the Queensland/NSW link. In most circumstances that link will still be constrained by high generation near the border at the receiving end so for example if Kogan Creek? is at full power, the link north from there will be overloaded even if NSW has plenty of spare capacity

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