Owners and developers of existing and planned wind and solar projects in north-west Victoria have been warned that their facilities run a high risk of “curtailment” – a deliberate cut back of their generation capacity – because of the weak grid in the area.
The warning, given by the Australian Energy Market Operator, specially mentions three new wind projects and five new solar projects that are due to come online within the next year.
AEMO also warns of a likely further decrease in “marginal loss factors” – the key calculation that acts as a multiplier of the estimate output delivered by power generators – and advises that some projects may need to consider battery storage to avoid output being spilled.
The warnings about curtailment and reduced MLFs will need to be considered carefully by wind and solar project developers and owners, because of their potential to have an impact on project economics, and on the ability to source finance.
Marginal loss factors have already become an issue in north Queensland and western NSW, and to a lesser extent in Victoria, as the shape of the grid changes, and more renewables are built in certain areas, and major demand errors also shift.
Victoria is emerging as one of the next major crunch-points because of the strength of the state’s renewable energy target – 40 per cent by 2025 – and the relative weakness of the existing grid, particularly in the western part of the state.
The problem was identified in a major report that we wrote about last year – Victoria’s big renewable energy plans face major network hurdle – when AEMO warned that curtailment rates of up to 50 per cent could be experienced if the network was not upgraded.
It pointed, in particular, to the 220kV line that links Ballarat, Horsham, Red Cliffs (a key connection spot between Victoria and NSW), Kerang and Bendigo, and this is again the focus of its latest update.
It notes that between Ballarat and Horsham there are already two substantial wind farms, Ararat and Waubra – and these will soon be joined by the 80MW Crowlands, the 204MW Bulgana and the 226MW Murray Warra wind projects – that may see their generation capacity limited.
“With these five wind farms connected, the (Ballarat to Horsham) line will, at times, be loaded beyond its thermal capacity,” AEMO says. “Associated network constraints may result in limitations on the generating capacity of these wind farms.”
AEMO says there has been significant interest in further wind and solar projects and also makes a similar warning to proposed solar farms in the area – the 110MW Wemen, the 100MW Bannerton, the 90MW Karadoc, and the 81MW Yatpool solar projects.
All of these are due to be connected in the middle of this year, and with new projects also being commissioned on the other side of the border in NSW, which influences flows coming south via Red Cliffs, then issues may arise.
“If further development proceeds as suggested, this will add to the thermal constraints in this area,” AWMO warns.
“The connection of new generation in (north-west Victoria) has contributed to Marginal Loss Factors (MLF) in the area decreasing, with some generators experiencing a decline in over 3 per cent from 2017/18 to 2018/19.
“It is likely that with the addition of more generation in the area loss factors will continue to fall.”
This is particularly important for project developers. Many will have – or should have – taken reductions in MLFs into account when putting together the business models for their projects.
The MLF is a calculation used to estimate how much a plant’s output actually reaches a destination. An MLF of 0.9, for instance, suggests losses of 10 per cent, so a wind, or solar plant will be credited for just 90MWh out of every 100MWh registered at the meter at the plant.
The MLFs also apply to fossil fuel generators, but the worst affected – peaking plants in regional areas – don’t care so much because they only switch on when prices are very high, so are guaranteed of big profits regardless of a reduced MLF.
AEMO says the problems will be exacerbated as the number of connections increase along these lines, and suggests that it will apply to smaller installations too.
“Where considered reasonably necessary for adequate system operation and maintenance of power system security, generators below 30MW will also be required to be included in central dispatch,” it says.
“The relatively low system strength in North-West Victoria may result in additional constraints and works may be required to ensure the stable operation of additional generation. These works may include installation of synchronous condensers or other plant to raise fault levels.”
It says grid upgrades are an obvious solution, but it is not yet clear that there is an economic case to do so, nor that anything could be delivered within seven years – when the VRET is due to be met.
So it suggests that some wind and solar farms consider battery storage, locating the project elsewhere, or even paying for its own infrastructure upgrade.
“There are a number of things that could assist in alleviating the network congestion, including:
“If your project is in its early stages, if possible consider alternative network locations, or investigating potential energy storage solutions to store excess electricity generated by your wind or solar farm.”
Ironically, some wind and solar projects are already doing just that. Bulgana and developer Neoen is proposing a 20MW/34MWh battery storage project to help deliver 100 per cent renewable energy to Nectar Farms’ new vegetable greenhouse as part of a $550 million project.
Ganawarra is also building a 25MW/50MWh Tesla battery to accompany its newly completed 50MW solar farm, while a battery storage facility is also being proposed for Ballarat, using Fluence technology. It will be contracted to EnergyAustralia.
These, however, will likely only address curtailment issues, and not necessarily marginal loss factors.
AEMO is also warning of imposing pre-contingent constraints that will apply to generators (or groups of generators) to limit the total lost generation for a single contingency to approximately 600MW.
The implication there is that it will take action if too much capacity is loaded on to one line, given the potential for a network fault to take out significant capacity, and the need to find an alternative source.
Such contingencies already exist for large fossil fuel plant – such as if a 500MW coal unit trips suddenly, as they are wont to do, particularly in summer. But this may be the first time a similar approach is taken for groups of wind and solar farms.
All of a sudden, the developers of wind and solar farms have a lot more to think about than the cost of generation and the striking of power purchase agreements, or the state of the wholesale market.