Two visions of Australia’s energy future – flexible vs fair dinkum

It’s probably just as well Australian Energy Market Operator boss Audrey Zibelman has been in Australia for more than a year – it gives the American at least half a chance of discovering what the federal government means when it keeps on calling for “fair dinkum” power generation.

When and if she finds out, I hope she can let us know. Zibelman certainly won’t find the expression in the dictionary, and while energy minister Angus Taylor made constant reference to the government’s focus on “fair dinkum” power in his speech to the AFR Summit on Wednesday, it is still not entirely clear what he really means.

Is it just about coal and gas-fired generation and “baseload”, or might it also include “firm” renewables? We may find out soon enough when Taylor outlines the details of his promised program to underwrite new investment in “fair dinkum” capacity.

But here are some hints. Taylor has made it known he thinks there is already too much wind and solar in the grid – the “intermittents,” as he calls them. He credits them for bringing down electricity emissions, which is grand, but insists this has been done without enough planning and without enough “fair dinkum” power.

And given his government’s attachment to coal (notwithstanding the IPCC report approved by, and then dismissed by the government, that recommended coal be ditched by 2050) it is a fair bet that he is looking to last century’s technology.

“Now, reducing fair dinkum, reliable generation, dispatchable generation …. at the expense of unreliable generation, leaves our homes and businesses vulnerable to load-shedding and blackouts,” Taylor said. “We cannot put our heads in the sand and ignore the challenges driven by weighting the grid rapidly towards intermittent generation.”

And he cited the situation in South Australia where he erroneously claimed that wholesale prices were high because of renewables, and that one-third of the state’s wind capacity was curtailed “for a large proportion of the time.” This was a claim Taylor made in a radio interview last month and has also been trotted out by coal entrepreneur Trevor St Baker. As we noted here, it’s bunkum.

Is this just politics, or ideology?

Contrast this with Zibelman, whose job it is to actually run the grid and keep the lights on – despite that accelerating uptake of  renewables, the ageing energy infrastructure, the increasingly heat-affected traditional generation and the hotter and drier summers and the risks of bushfires and storms.

Zibelman told the AFR summit on Wednesday that Australia has no choice but to embrace the future, because the future won’t stop.

“We have to look at the future, we have no choice but to look at the transition that is going on,” Zibelman said, pointing to the plunging cost of wind and solar, and the continuing and rapid take-up of rooftop solar by households and businesses.

“There are 6.5 panels of solar being installed on rooftops every minute in Australia. We are leading the world in terms on implementation … that’s a reality we have to deal with.”

Why is it happening? Because of falling prices and consumer preference, Zibelman says.

“They want to be able to control and manage (their energy needs). We have to think about how to manage that system to provide value to consumers.

“We don’t want consumes to leave the grid in frustration. We want them to stay on, because we want all these resources available to us.”

Zibelman and Taylor both agreed that the reliability obligation from the now stranded National Energy Guarantee is needed, and both Taylor and Energy Security Board chair Kerry Schott confirmed that work continues on this.

But just in case anyone thinks this means more baseload, Zibelman made the point that the critical need is flexibility; particularly for those hours at times of peak demand – and it is just hours – when the grid operator needs to call on dispatchable resources.

Interestingly, Zibelman also talked of the transition from a synchronous grid to an asynchronous grid (i.e. thermal generators with their spinning machines to inverter-based technologies like wind and solar) and pointed to the role of the Tesla big battery in South Australia.

The battery’s presence, she noted – and as RenewEconomy reported exclusively last week – has enabled AEMO to ditch a system requirement that had been costing more than $100 million and replace it with something that would cost less than $4 million.

So managing the transition, she says, is not just about “sweating” the assets that are already available, but as renewables inevitably replace coal (as they have in South Australia) to use the best technology at the lowest possible cost.

“What’s happening is we are replacing old thermal with renewables …. and we are moving from a synchronised system to an asynchronous system, and we need tools to get there,” Zibelman said.

“We need to have a much more diverse market to take advantage of weather changes and temperature changes,” she said, and to ensure the system remains fully dispatchable. This also meant ensuring that different technologies were valued and priced accordingly.

“People are amazed about what Australia is doing,” Zibelman added, noting the long “stringy” grid that is unique in the world because of its size and shape, and because it is not attached to another operating system.

“It is very complicated for us to operate. For us it means to get the best tools and understand how to use those tools better – such as storage.”

Zibelman made a bunch of other interesting points:

– The energy sector missed the 3rd industrial revolution, but can not afford to miss the 4th industrial revolution, which is about artificial intelligence and digitalisation. At the same time, it needs to focus on cyber security. “It would be disastrous.”

– The pace of change is accelerating. Where once the industry could think about decades “we have to think about months.”

– Different resources provide different value. “And we want to be able to operate a transactive grid that rewards flexibility and other elements that the power system needs.”