Victoria wind and solar farms warned of curtailment

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.

“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.