The strangely invisible energy projects that led to all those “blackout” headlines

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One of the biggest set pieces in the year for the Australian Energy Market Operator is the release of its annual 10 year reliability outlook, known as the Electricity Statement of Opportunities (ESOO).

Until recently, it was a wonkish dive into demand and generation forecasts that served to advise industry on where and when might be a good idea to build new generation.

It still serves that purpose, but now that the grid is being turned upside down by the switch from fossil fuels to renewables, it has become as much a flashpoint for competing energy ideologies and a platform for dramatic headlines as a useful data set for a spreadsheet.

The latest ESOO is, according to one seasoned energy analyst, perhaps the bleakest outlook for reliability in more than 20 years of the National Electricity Market, with potential shortfalls predicted in all states bar Tasmania over the coming few years. And some very soon, or none this coming summer.

The media, predictably, didn’t miss a beat. “Blackouts set to escalate”, cried The Australian, “warning of looming blackouts,” said 9News, “blackouts set to increase,” said the SMH, “AEMO warns of power gaps”, said the ABC.

Except, that’s not quite what is says. AEMO’s forecasts are based on what would happen if nothing was done, just as a car approaching a tree would no doubt hit it if no brakes are applied or direction altered, so shortfalls will be experienced if nothing is done to fill the gap.

AEMO has often been quite conservative about the way it describes “committed” projects, and makes it clear in its latest document that if all the 3.4GW of what it calls “anticipated” projects are in fact built and commissioned on time, then the situation is largely solved.

But in the latest ESOO, some of the projects it describes as “anticipated” rather than “committed” has raised some eyebrows, and South Australia – leading the world in the switch to wind and solar with two thirds of its electricity demand coming from “variable renewables” in the past 12 months – is a prime example.

Image: AGL

Possibly the most striking of these projects is the 250MW (and up to four hour storage) Torrens Island battery, which is ranked as “anticipated” despite being well under construction (see pic above), and due for completion, says its owner AGL Energy, early next year.

Another of those “anticipated projects” is the Lincoln Gap battery, which is small (just 10MW/10MWh) and located next to the wind farm of the same name. It was actually built more than two years ago, but has been sitting idle, possibly due to connection and commissioning problems, but no one is saying.

Another “anticipated” project is the Tailem Bend battery, which at 41.5MW/41.5MWh, and is about to begin construction, according to its Singapore based owner Vena Energy. It is being built by Doosan, which just completed the Wandoan battery in Queensland, with construction due to start next month.

Official start of construction at the Goyder South wind farm. Photo: Neoen.

Another project in South Australia that didn’t eve make the “anticipated” list, and is simply listed as “proposed” is the 412MW Goyder South wind farm, the biggest in South Australia, which is already under construction. It is the first stage of a massive complex that could host 1200MW of wind, 600MW of solar, and 1800MWh of storage.

Granted, developers Neoen had to announce the start of construction twice, once in January for the then Liberal state government and again last week for the new Labor state government. That bulldozer in the picture, we are assured, has not just been rented for the day. Construction of the first stage is due to be finished in 2024.

AEMO’s forecasts of a reliability gap in 2023/24 in South Australia, and the media headlines, provided perfect fodder for a Twitter outburst from state energy minister Tom Koutsantonis, slamming the previous Liberal government’s decision to “put all its eggs in one basket”.

And it’s true that the ESOO notes that the $2.4 billion Project EnergyConnect, linking South Australia to NSW, is running a year late.

But in a webinar on Thursday, AEMO executives made clear South Australia’s reliability rating would fall down below the 0.0006 criteria (which translates to less than 10 minutes a year of outages per customer) if the three batteries mentioned above, and the 123MW Bolivar gas turbines, are in place by then.

Those gas turbines already exist (see pic above), but they do need to be moved from their current spot south of Adelaide to a new location north of Adelaide, under an agreement between the state government and Iberdrola. That might, to a lay person, seem like a reasonably committed project.

Elsewhere in the ESOO, the country’s biggest wind project, the 1GW MacIntyre precinct in Queensland, which is majority owned by Spanish energy giant Acciona, and partly owned by Ark Energy, a local offshoot of Korea Zinc, is also listed as “anticipated.”

But the massive project has already begun construction, in early May and then more formally in June, has taken photos with state politicians, signed supply contracts with CleanCo and Sun Metals, and received $160 million in funding from the Clean Energy Finance Corp to help pay for a new transmission line.

That project might also seems quite committed, at least to the lay person.

Then there is the Darlington battery, which has a supply deal with Tesla, a contract with EnergyAustralia, and financing from the CBA, along with a grant from ARENA.

It, too, is still ranked as “anticipated,” along with the giant Waratah “super battery” promised by the NSW government and the Wooreen battery in Victoria planned by EnergyAustralia. Both are currently subject to tender.

So why are some of these projects “anticipated” and not “committed”. AEMO says it is because it has five strict criteria, around planning, funding, connection and commissioning approvals, and any project must tick off at least three of these to be regarded as “committed”.

It also has to rely on information provided by the developers themselves. And, as we have seen with Snowy Hydro, which is telling AEMO the Snowy 2.0 pumped hydro project is on time, despite its owner (the federal government) and its major contractor saying otherwise, not all information may be up to date.

Still, it does bear some questions about AEMO’s own approvals process. One of the big problems for renewable and storage projects, and the Lincoln Gap battery is just one example, is the complexity of the commissioning process which has led to many and sometimes lengthy delays.

AEMO was asked about this on the webinar, but considered that to be a topic to be debated elsewhere.

In the meantime, though, AEMO has the headlines, and the ammunition, to push its case for the fast-tracking of the new transmission lines – at least five of them – that it insists are absolutely essential to filling in the gaps in the grid to support the switch to renewables, not to mention Labor’s target of 82 per cent renewables by 2030.

At least the regulators who decide on such things are now allowed to consider the environment and climate change as part of their assessment (they were not allowed to do so previously because the National Electricity Objective excluded them), and that should help smooth the process.

AEMO’s pitch, that there is so much to do and no time to waste, is entirely valid.

But given that the entirety of the NSW government’s infrastructure road map is also excluded from its reliability forecasts, and some of the assets it discusses might actually be complete before it gets to rate them as “committed” this time next year, the picture might not be as bad as the media headlines will tell you.

Note: Which is not to say there is no risk of blackouts at all. Things can, and  might go wrong, particularly with problems at large coal generators (the biggest worry), and transmission lines. In fact, AEMO is now pushing for reliability assessments to be refocused on what it calls “tail risk” – basically the assumption that what can go wrong, might go wrong, the the operator should be planning for it.

 

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