Victoria’s big renewable energy plans face major network hurdle

Victoria’s ambitious renewable energy plans – to source 40 per cent of its demand from renewables by 2025 – face a potential significant hurdle because of network constraints in the west of the state.

A new report from the Australian Energy Market Operator suggests that significant amounts of wind and solar capacity could be curtailed if much of the capacity is built – as expected – in the western part of the state.

It is estimated that Victoria’s state-based renewable target will require some 5,400MW of new generation – mostly wind and some large scale solar – and some 3,000MW of this could be built in the west of the state, which is rich in both resources..

But this poses problems. If these installations are built around the 220 kilovolt (kV) transmission lines, which most will have to be, the AEMO study warns that up to half of their energy output could be curtailed – and some network solutions such as building a new high voltage wire could cost $1 billion of more.

The Victoria government is believed to be aware of the issue, which is one of the reasons it is moving so quickly on its new battery storage tender, which seeks to install at least two 20MW battery story installations, with a combined minimum of 100MWh of storage, in the west of the state.

More storage will likely be needed, and while some upgrades of transmission lines are likely, it is believed that the Victoria government will consider location and grid constraints when choosing and allocating wind and solar projects in that part of the state. It could be a reason why the legislation for the VRET has been delayed.

Curtailment is not unusual. It is a growing problem in Germany, and has reached catastrophic levels in China where huge amounts to wind and solar have been built in provinces without proper grid connections. But it is not, and would not be, a good look for the Victoria government.

The AEMO report notes that western Victoria is a rich resource for wind and solar resources, and for cheap land. The electrical infrastructure, however, is “insufficient to allow unconstrained access to all of the new renewable generation” seeking to connect to it.

This map to the right illustrates where the problem lies. The purple lines represent the 220kV lines, while the yellow one is the 500kV transmission line.

The most congested line is 220 kV transmission path that loops between Ballarat – Horsham – Red Cliffs – Kerang. But all parts of the line are expected to have “weak” system strength over time.

And this is the problem. AEMO has received enquiries from more than 5,000MW of potential projects in the area, and 80 per cent of these enquiries are linked to the weak 220kV and 66kV lines. (See graph below).

If the issue is not addressed, more than half the output may have to be curtailed, forcing the state to import electricity from interstate imports.

“Preliminary studies for the Base Case scenario (3,000MW of wind and solar in the region) estimate that more than 1,600GWh of wind and solar energy per year is restricted by the thermal capability of the Western Victorian network,” the report notes.

“Should there be no action to alleviate these limitations, the constrained generation would primarily be replaced by imports from other regions and generation outside Western Victoria,” it says

Non network options include battery storage – equal to at least 10MW and with one hour of storage. This may not be enough to deal with the whole issue, because on some lines the amount of capacity that could be constrained is 680MW, and for up to 109 hours.

“Due to the MW size and duration of constraints, it is unlikely that a non-network service could completely remove the expected limitations.”

Unaddressed, this is what the level of constraints could look like.

It explains why the Victorian government is eager to get its new battery storage installations in place – not just to deal with potential shortfalls and issues in the coming summer, but also to reinforce the network to allow for more options.

These are expected to be the first of several large sale battery storage installations, with the government seeking expressions of interest of up to 100MW in total.

The Victorian government’s strategy is believed to focus on non-network solutions, which could also include demand response, and synchronous condensers.

And it will also carefully judge projects for their impact on the grid, and the likelihood of constraints. The best opportunities for developers might come for those who get in early. Certainly, there is great anticipation to see the VRET legislation, particularly given that the national RET is likely to be met within the next 12 months.

It also underlines the Victoria government’s interest in local mini-grids, and other sources such as pumped hydro in old Bendigo gold mines, rather than simply reinforcing the network – which has been the industry’s answer for everything over the last few decades.

Once the non-network alternatives have been addressed, then the government can look at what might be needed in the way of upgraded poles and wires.

Battery storage can add further value by providing Frequency Control Ancillary Services, system restart ancillary services, or synthetic inertia to keep the grid stable. Or, in the case of regional towns, can keep supply for several hours if there is a wider blackout because of network problems caused by storms, bush-fires or equipment failure.