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Australian Energy Market Operator

WA Electricity Grid Needs Upgrade For Solar

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A leading energy export from the Australian Energy Market Operator has warned that the WA Electricity Grid requires upgrades over the next couple of years or else it risks being completely overwhelmed by the influx of solar in the state. 

The WA Electricity Grid & Solar

According to TheWest’s website, solar energy now makes up the majority of the WA Electricity Grid’s energy collection – representing around 700MW of capacity. They interviewed Cameron Parrotte, the head of strategy and innovation at the Australian Energy Market Operator – who noted that measures need to be put into place to manage the influx of solar into the grid before it starts to overload.  Parrotte said the amount of additional solar capacity is currently growing at 35% per year. 

“When you talk about comparison to other States, percentage-wise we are flying,” he said.

“Some people then say ‘you’ll start running out of roof space’.

“What you are tending to find is that some people who were the early adopters, some of their PVs are starting to reach the end of their life.

“Instead of putting up another 1kW to replace the 1kW they had, they’re putting in 5kW.”

Parrotte / The West said they believe solar power could fully displace conventional methods of energy generation (coal/gas fired plants) for short intervals within as few as five years. Initially, these intervals would be restricted to times when electricity demand is low (e.g. mild, sunny days in the middle of the day) but surely sends another message to those trying to delay the death of traditional electricity methods. It’s now up to providers and authorities to upgrade the grid and make sure it’s able to take the excess power solar will provide. 

We’ve previously written about blockchain powered P2P energy trading fintech platforms such as Power Ledger or WePower along with less technologically intense solutions such as community solar – the writing is on the wall here and it’s only a matter of time before renewable energy completely overtakes coal and gas fired plants, so it’s important the government act now to ensure the grid is capable of withstanding the new era of energy generation!

WA Electricity Grid - Sunwise - Ludlow Solar Installation
WA Electricity Grid – Sunwise – Ludlow Solar Installation (source: sunwiseenergy.com.au)

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Liddell Power Station To Close in 2022 – AGL Energy

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AGL Energy will be closing the Liddell coal-fired power station in 2022, resulting in a 1000MW shortfall of energy. AGL has an exciting plan to cover this missing amount by using a mix of solar power, wind power, pumped hydro, battery storage, and gas peaking plants over a three-stage period leading up to 2022. 

The Closure of Liddell and its implications

The Turnbull government had asked AGL Energy to consider extending the life of the Liddell power station or selling it to someone else, but it doesn’t seem like that plan is on AGL’s radar. According to the SBS, Energy Minister Josh Frydenberg has asked the AEMO (Australian Energy Market Operator) have a look at AGL’s idea, advising that it is best to “leave the judgement of (the plan’s) merits to the experts”. 

AGL’s plan for solar/wind/pumped hydro/storage and gas peaking plants will cost $1.3b and is expected to provide electricity at $83/MWh for up to 30 years, in contrast to the much higher cost for Liddell. By keeping it open for just an extra five years the cost would be $920 million and it would cost $106/MWh, according to figures stated on the SBS. 

“Obviously it’s a significant proposal, there is a host of new technologies and new investments as part of it,” Mr Frydenberg was quoted in Melbourne on Sunday.

“You need all forms of energy in Australia’s future energy mix, there’s a role for coal there’s a role for gas, there is increasingly a role for wind and solar and for battery storage,” he added.

Liddell Power Station - AGL Energy to close it in 2022
Liddell Power Station – AGL Energy to close it in 2022 (source: wikipedia.org)

This news comes hot on the heels of the closing of the Hazelwood coal-fired power station in Victoria in March this year. Numerous other coal-fired power stations across New South Wales and Victoria are nearing the end of their 50 year lifespans – with two of Victoria’s three coal-fired plants having outages during last February’s hot weather. 

Federal opposition energy spokesman Mark Butler was complimentary of the plan – whether 

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‘National Energy Guarantee’ a national disgrace.

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Malcolm Turnbull’s leadership has been fraught with spineless (or a complete lack of) policy and the Government’s announcement of a National Energy Guarantee yesterday was congruent with what we’ve come to expect. In short, their national energy policy removes the Clean Energy Target, has 0 renewable energy policy after 2020, and defers critical decisions to state Government, the Australian Energy Regulator, and the Australian Energy Market Operator. The ‘National Energy Guarantee’ policy is based on a unanimous recommendation by the independent Energy Security Board, chaired by Dr Kerry Schott.

National Energy Guarantee

As per the official document, the National Energy Guarantee will actually comprise of two separate guarantees, determined and enforced by different bodies: 

The reliability guarantee will be set to deliver the right level of dispatchable energy—from ready-to-use sources such as coal, gas, pumped hydro and batteries—needed in each state. It will be set by the AEMC and AEMO. The goal of this is to help stop blackouts like those seen in South Australia last year and reduce prices by using long-term contracts rather than short-term spot prices. 

The emissions guarantee will be set to contribute to Australia’s international commitments. The level of the guarantee will be determined by the Commonwealth and enforced by the AER. This means that renewable subsidies and incentives have been scrapped completely – retailers will be responsible for ensuring their power is efficient enough to help Australia meet its international obligations (our Renewable Energy Targets signed up during the Paris climate change conference). No word yet on what the penalty would be for those not reaching this target but presumably they’d be able to make up for it the next year or face a light slap on the wrist. 

This is a ‘technology- neutral’ position which does not ‘pick winners’ – so it’ll be interesting to see how this pans out. What impact will it have on the myriad Australian solar farms currently in various stages of development? What about future plans? 

Residential Energy Prices

The Government estimates this Guarantee ‘could’ lead to a reduction in residential bills – around $100-115 per year over 2020-2030. They’re hoping to reduce spot price volatility without using subsidies or taxes – which theoretically could help the ballooning cost of electricity in Australia. See the graph below which is labeled ‘% increase’ on the Y axis – which may make it a little more difficult to see that the price has more than doubled every year since 2012. With Australian wages stagnating and underemployment at an all-time high, something needs to be done about these gigantic increases. But is this really the way to go about it? 

National Energy Guarantee - Average Retail Electricity Price Increases 2004-2017
National Energy Guarantee – Average Retail Electricity Price Increases (source:energy.gov.au)

We understand it’s difficult to balance this rapidly increasing price with the subsidisation of new technology which can take time to show results, but this 50c/day saving is hardly the ‘game-changer’ it’s hailed to be – so the myopic choice of ignoring Chief Scientist Alan Finkel’s recommended Clean Energy Target in favour of a 50c / day saving Turnbull can’t even guarantee is a perfect metaphor for the endemic, anaemic, short-sighted policy we’ve come to expect from Australian politicians over the past decade or so. How far can we kick the can down the road? I guess we’ll find out. 

It’s becoming increasingly clear that coal-fired generators have no future in Australia. Have renewables reached the point where they don’t need any help from the Government with regards to subsidies or tax breaks? Prima facie this looks like an atrocious plan for renewable energy and Australia’s energy future as a whole.

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South Australia Renewable Energy

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South Australia Renewable Energy targets are being smashed for 206/17. The SA government’s official target for renewable energy is 50% of demand and they were hoping to reach this by 2025. Recent figures released show that large scale wind power and rooftop solar PV in South Australia has already reached that target easily – measuring at 57% this financial year.

South Australia Renewable Energy –

South Australia Renewable Energy 2017
South Australia Renewable Energy 2017

The Australian Energy Regulator released a report last week that shows wind+solar has reached 57% in the 2016/2017 financial year.

According to the AER, “In the nine months to 31 March 2017, the contribution of wind generation was even greater, supplying 50 per cent of South Australia’s electricity,” – this is as a result of Snowtown Wind Farm (currently 368.7MW) and Hornsdale Wind Farm (currently 315MW) reaching key stages in construction and affecting the output considerably.

Although wind power is currently generating huge numbers of energy for South Australia, The Australian Energy Market Operator (AEMO) expect that the amount of PV solar rooftop will double by 2025 (this will result in over 1500MW). The most important thing at this point is figuring out an intelligent way to organise battery storage of solar energy as this technology continues to evolve. South Australia has had a torrid 12 months with regards to energy blackouts and it’s imperative that we find a way to manage situations where the wind doesn’t blow and the sun doesn’t shine. The Bungala Solar Project (220MW, to scale to 300MW) is slated to start supplying power by summer 2018 and reach full capacity (220MW) in August 2018.

Last week we also released information on the Clean Energy Australia Report for 2016 which showed that SA generated 5,508Gwh in renewables, with a penetration of 48%. RenewEconomy have estimated that Bungala and the Lincoln Gap wind farm (212MW) will take the state to 65% renewable – by far the biggest of all the states in Australia. Although South Australia has battled with power issues over the last year it is exciting to see how motivated they are to ensure they generate as much renewable energy as possible. As the state upgrades its ability to manage rapidly evolving technology whilst mitigating the swings in available wind/solar we are sure they’ll continue to lead Australia in the industry and are excited to see what this means for the future of renewable energy in South Australia.

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