Australian renewables integration: Part 1

From Climate Etc.

by Chris Morris & Planning Engineer (Russ Schussler)

What they are doing and what issues are occurring

Australia is transitioning from a coal fired generation system to one based on solar and wind. There is an accelerated program to do this driven by both major political parties. There has been a lot written about the developments, mainly as advocacy, and many relevant facts are not mentioned. The proponents see the transition as world-leading while the skeptics believe the country will become the crash test dummy proving it won’t work. Already there have been major issues. Those in themselves and the remedial actions needed are harbingers that increasing penetration is likely to lead to a very expensive and unreliable electrical energy system.

The country isn’t the image the travel posters promote. More than 80% of Australians live within thirty miles of the coast and an even bigger percentage in urban areas. The big cities are hundreds of miles apart around the continental edge. These factors have had a major influence on their grid. Until quite recently, the system was primarily supported by large multi-unit coal fired power stations, located next to the coalfields. The transmission lines ran from them to the cities they served. There was very little interconnection. This was influenced by the very parochial political system.

Australia is a federal system, with six States and several Territories. The States jealously guarded their rights and had regular disputes with both their neighbours and the Federal Government. Interstate rivalry can go beyond a joke. Each State originally ran their own electricity system. Gradually this expanded and interconnectors between States were put in. As well as the AC lines, there are three DC interconnectors including a near 200 mile undersea cable joining Tasmania to the mainland. The interconnectors are ties between the State grids allowing interstate flow, but they often act as chokepoints.

In the 90s, the National Electricity Market (NEM) started. The name is a misnomer. Western Australia, about a third of the country, isn’t a part of it as it is too far away to link. Neither are the numerous isolated towns not connected to anywhere. Part 1 deals with grid as it is now in the Eastern and South-eastern States.

The management and operation of the electrical system is complex and mainly market driven. At the top is the Energy Regulator, a federal agency enforces the rules, monitors the markets, sets the revenue for the monopolies and is the arbitrator for disputes. Together with them is AEMC (Australian Energy Market Commission) who make and amend the rules but they can’t propose them.  The federal AEMO (Australian Energy Market Operator) is the System Operator, running their electricity (and gas) markets. The market is run on a merit order dispatch, subject to load requirements and constraints. Negative pricing is allowed to ensure must run generation. For every trading period, originally half an hour but now five minutes, the generators submit a power and price. This can be graduated. This is arranged in increasing price forming a total MW versus price stack. The price paid to all dispatched resources is where the load line crosses this merit order stack. Some plant may be constrained on or off, regardless of their place in the merit order. There are also a number of secondary markets for services like reserves and frequency control.

Most of the generators are owned by companies which seek to run at a profit. They can connect to the grid if they comply with the rules. There can be problems connecting if there are no local lines or the ones there are overloaded. They generate when dispatched. For those like wind and solar who are semi-scheduled (a euphemism for unreliable) there are special rules around their bids.

Each State has a transmission grid company that owns and operates their high voltage network. There are distribution companies for the low voltage networks that have territories for which they are responsible. For example, NSW (New South Wales) has three of these. Both Transmission and Distribution are natural monopolies so are run as regulated ones.

There are a myriad of electricity retailers. Some are generator based retailers (gentailers), providing a customer load for their generation. Most retailers have longer term contracts with generation companies for their load requirements. There are niche suppliers who run on spot market prices but have backup hedges for their load requirements. Some market gas or internet as a package. The NEM supplies around 9 million customers – they are the group that ultimately pay the cost of both operation and capital development.

To this market has to be added the uncontrolled domestic generation by solar panels. These make up a significant and increasing part of the generation base. In one state one day, they provided over 90% of the instantaneous generation.  The installations are supported by subsidies and generous feed-in tariffs. Most households do not have batteries.

AEMO does the forecasting. They look at factors like government policy, load predictions, generation development plans, system security requirements and the like. They use these to put out a variety of regular reports; some general, some specific, detailing what changes need to be made. The transmission companies are responsible for execution and to get funding approval from the regulator. As well as these, if a major incident occurs, they will put out a report detailing what happened, why and what changes need to be made. These often feed back into the other reports.

That is how it all fits together. Needless to say, the bureaucracy cost is high and there is a lot of employment for administrators and lawyers. The maps here show the location in each State of the transmission system and generators, both existing and proposed ones. The NEM supplies around 9 million customers – they are the group that ultimately pay the cost of both operation and capital development.

Cost to consumers

The renewables are subsidised to varying extents. Because it can be present at different levels and through different forms right down to the domestic level, it seems no one is exactly sure how much renewables are subsidized. However, the power price has risen over the 40 years at twice the rate of inflation with prices really taking off in 2007, coincident with increased renewable energy target. The authors are unaware of any detailed breakdown of exactly what has caused this rise other than the corelation with RET (Renewable Energy Target).  The power price is still going up. We note the Ukraine war was blamed for part of the rises, even though Australia imports no electricity or thermal power station fuel.  In contrast with reality, the AEMC just two years ago, and others more recently, predicted power would be getting cheaper by now. Even if it is not in the power bill, the price of these subsidies comes from somewhere and eventually are paid for by the taxpayer.

Where the Renewables are currently at

Wind and solar, the unreliables, are now a significant part of the current NEM generation but the backbone is still coal – over 60% of the energy. Wind is less than 15% and grid solar 5%. The snapshot below when the sun wasn’t shinning shows the contribution coal still makes.  There is also the significant presence of domestic PV.  Because it is mainly behind the meter, there is no accurate data on its precise magnitude. But scaling up the contribution of grid solar and allowing for less efficient installations, it would be in the order of another 10%. However, even at those levels, the intermittency and unpredictability has had major detrimental impacts on power stability. Note the instantaneous power contribution can be a lot higher that the numbers quoted above. This article mainly looks at just the broader problems of its unpredictability.  Later postings may cover a more detailed analysis of some specific problems that have occurred so far.

Management of the grid on a day-to-day basis depends on reliable generation and dispatchability. The renewables offer neither. For wind, there is often the mantra that the wind is blowing somewhere. The actual data does not back that up. A skeptic has for a number of years compiled the daily wind generation on the NEM. The results are revealing. The graph shown below is for just one month, June 2022. There is a synchronicity in the output of all the windfarms. To cope with the drop in those declines from wind, that is a lot of power that needs to be quickly ramped up.  If the wind isn’t blowing and it is night-time, where will the energy to make up the dip come from? The mainstay 400MW+ coal units that form the background of the energy supply can take three days to get to full load if cold.

Solar can be just as bad. On 1st and 4th July, 2022, the power from solar those days in Queensland was only a small fraction of what it had been the previous week or so. On the 4th, there was a cloud bank over all of eastern half of state all day and little wind production as well. The interconnectors from NSW were at rating with imports and the market price was at the maximum $15,000/MWh.

Proponents of the renewables boast about how places like South Australia (SA) achieved near 100% renewable energy generation, often around the middle of the day, implying they could do it all the time. What they don’t say, because it spoils the narrative, is a lot more instructive. Look at the generation profile below of one such day. They had to keep the gas turbines on to provide inertia. These had to generate most of the load before dawn and at dusk because the wind wasn’t there. Battery provided very little. The balancing interconnectors to Victoria that allowed near 20% export or coal fired power to come in were important if not essential. Without the gas power and the Heywood line, SA would have been in real trouble.

Even on a “normal” day, the merit order in SA is akin to a switch. When the sun is out and the wind is blowing, the merit order is in negative pricing. When it’s not, prices go up, often around $400/MWh. That raises costs for the distribution companies which pass it on their customers.

Heywood’s interconnector play a lot bigger everyday role in buffering SA’s erratic generation than renewables proponents will admit. In the right conditions, up to 40% of the State’s load come in through its lines. That stabilises its voltage as the frequency is locked onto that of the NEM. There is a smaller interconnector from north-western Victoria, but this is DC so it has a lot less of a role. Heywood’s benefit was demonstrated during an islanding outage in November. During the outage it cost the grid operators in just two days $22M just to provide Frequency Control services. These are what used to be called governor control on grids with a lot of inertia and big steam turbines. On modern grids, many thermal plants, especially gas turbines can run in this mode. Things often happen a lot faster with less conventional generation, so the corrections of frequency control have to be sped up. Grid operators promote batteries are capable of this function, but that is making a virtue out of a necessity. All those islanding costs will need to be paid by either the power consumer or the taxpayer. That is why SA has the most expensive power of any of the mainland States in the NEM.

The examples above show the unpredictability NEM grid operators have had to regularly cope with. It is relatively easy to match load and generation when conditions are just right. However, that it generally takes a very fine balance backed up by a lot of very expensive plant infrastructure. Much of it is not needed for day-to-day operations. However, when things go wrong, they can turn catastrophic in a very short time. The grid power supply to major infrastructure within a city may be 99.99% reliable, but can it cope with the power unpredictably being out for an hour a year which that number is? Reliable electricity isn’t just a nice to have for modern life, it is essential.

Forty years ago, Australia had an electricity system delivering cheap, reliable power. That is no longer the case. Development and change have been driven by politics and dogma, not engineering and economics. Things that work are being replaced by that which looks good to virtue signallers, especially to those that don’t understand the issue. Prices have risen a lot faster than inflation.  Even then, the number on the power bill is probably not the full cost as there are hidden ones. The authors are unaware of any recent study of the price that takes into account or even identifies all the subsidies. However, for the money expended, they should have had a capable, robust, gold-plated system. It isn’t. The system staggers from crisis to crisis, the solution usually being more rules, market interventions and invariably, a subsidy. The price of electricity fluctuates between glut and scarcity, even on a daily basis. Large industrial users like smelters are downsizing, offshoring, or getting another subsidy. Australia used to be referred to as the lucky country. That may no longer be the case.

Next up:  “Australia Part 2; A Grid revolution around the Corner? Or Just the Madness of a Crowds?” Will look at efforts within Australia to reduce the need for synchronous generators and allow for high penetration of renewables.  Additional posts may follow covering other issues within Australia.

Bio:  Chris Morris is a long-time but irregular commenter on Climate Etc. He is a semi-retired power station engineer in New Zealand.