Guest essay by Eric Worrall
The Australian Energy Market Operator, the government body responsible for ensuring the stability of Australia’s energy supply, has issued a stark warning that closure of coal plants will dramatically increase the risk of widespread blackouts – that building additional renewable capacity will not compensate for the loss of coal capacity.
THURSDAY, 11 August 2016
Strategic, efficient investment required to support Australia’s energy transformation
The Australian Energy Market Operator’s (AEMO) 2016 Electricity Statement of Opportunities (ESOO) report released today illustrates the growing importance of network and non-network developments to securely manage an evolving, lower carbon electricity generation future.
The 2016 ESOO provides National Electricity Market (NEM) participants, investors, and policy-makers with a projected 10-year outlook to 2025-26 of supply adequacy under a number of scenarios, and this year further generation withdrawals have been modelled in response to the COP21 emission abatement commitment1.
“As the NEM generation mix continues to keep pace with new technology and policy changes, future supply adequacy will depend on the availability and capability of new supply options providing electricity services when needed,” said AEMO Chief Operating Officer Mike Cleary.
From the information provided by industry, and assuming no additional generation withdrawals to occur between now and 2025-26, the only projected supply shortfall in the 2016 ESOO occurs towards the end of the outlook period in New South Wales.
“The 2015 ESOO identified New South Wales (NSW), South Australia and Victoria as potentially being at risk of breaching the reliability standard at various points over the next decade. The latest information suggesting only a shortfall in NSW in 2025-26 takes into account a reduction in demand forecasts, and illustrates a market response with some planned plant withdrawals deferred and an additional 537 MW of wind generation capacity announced,” said Mr Cleary.
However, additional to the information already announced by market participants, AEMO has modelled scenarios that assume the COP21 commitment is achieved, investigating the impact of potential, but not announced, generation withdrawals to meet the electricity sector target agreed by the Council of Australian Governments (COAG) Energy Council.
“AEMO has modelled the impact of withdrawing a further 1,360 MW of coal-fired generation capacity to meet the COP21 commitment under AEMO’s neutral scenario, with results suggesting potential reliability breaches occurring in South Australia from 2019-20, and New South Wales and Victoria from 2025 onwards.
“These breaches would most likely occur when demand is high (usually between 3-8pm), coinciding with low wind and rooftop photovoltaic (PV) generation, and low levels of electricity supply imported from neighbouring regions.
“In this scenario, the majority of coal-fired generation withdrawals are assumed to come from Victoria, which would reduce that State’s generation output to support South Australia and New South Wales via the interconnected network,” said Mr Cleary.
The 2016 ESOO report outlines the importance of maintaining power system security during this period of rapid transformation, and with the potential withdrawal of coal-fired generation across the NEM, a number of support services will need to be provided by other resources.
“The secure operation of the NEM’s 40,000 km transmission network – which transports generated electricity to demand points – is reliant on support services that manage the rate of change of frequency and system restart services.
“AEMO is signalling potential future supply gaps in providing these important stability services, gaps which could be met through prospective new forms of electricity generation, or alternative technologies.”
“To maintain a secure electricity supply demand balance during peak demand periods, AEMO is working closely with industry to identify both network and non-network developments. Possible solutions could include an increased interconnection across NEM regions, battery storage, and demand side management services,” said Mr Cleary.
AEMO’s 2016 ESOO follows the recent release of the 2016 National Electricity Forecasting Report, which looks at forecast electricity demand trends over a 20-year horizon. The ESOO analyses these demand trends against future generation availability to identify any potential breaches of the NEM reliability standard, which requires that no more than 0.002% of annual operational electricity consumption should go unserved for any region in any year.
AEMO will be hosting a roadshow for industry participants to critically examine and discuss options to maintain the high security and reliability standards that most Australians have become accustomed.
2016 ESOO scenario reference table
a) A centralised source for electricity refers to the national electricity transmission grid.
b) “Engagement” refers to the extent to which consumers proactively exercise choice of energy sources
and usage patterns.
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This warning confirms my assertion in a previous post that South Australia cannot provide stable electricity grid supply without access to Victorian coal power, supplied via the interstate interconnector. South Australian political pretensions to renewable policy success are nonsense.
The report leaves open the possibility that more battery capacity, massive investment in more interconnectors, or supply management might reduce instability.
In my opinion arguing that more connectedness will lead to stability doesn’t pass the smell test.
Imagine if all the interconnections anyone could want were available. Imagine say half of Australia was covered in clouds. The solar arrays in the sunny parts of Australia would have to produce not only enough power for local needs, they would also have to produce enough power to supply the parts of Australia which weren’t able to carry their own load.
Carry the game a little further. Say 4/5 of Australia was covered in clouds. Or 7/8 of Australia was covered in clouds.
As you explore increasingly unlikely but still very possible adverse conditions, you quickly reach a point where a significant chunk of Australia would have to be covered in expensive renewable installations, to provide the massive supply overcapacity required to achieve partial stability through interconnectedness.
Batteries are also not a real solution, at least with today’s technology. Storage systems such as organic redox batteries, which in theory might one day provide energy storage on the scale required, are still very much a laboratory toy.
The third possible solution, “supply management” – South Australians have already had a taste of that. I doubt a “supply management” policy of deliberately encouraging spot power prices to spike up to $14 / KWh when renewable generation fails will attract many supporters.
Of course, the obvious solution is to keep the coal generators running – but this would require an outbreak of political common sense.