Growing renewables: growing challenges

AEMO’s newly released Renewable Integration Study Stage 1 sets out in stark detail the challenges ahead for the NEM (and by implication, the WA system, as highlighted in yesterday’s blog) as the energy transition gathers pace.

The study notes the growing share of variable renewable energy (VRE) i.e. wind and solar in the NEM and identifies three main limitations to their output:

  • Network congestion – where the network cannot securely transport the full output of a VRE generator
  • System curtailment – where other resources are directed by AEMO to stay online in order to supply essential system services, displacing lower cost VRE that cannot supply these services
  • Participant spill – where VRE generators self-curtail in response to market signals.

The last of these is actually a positive phenomenon as it is a sign of the market working correctly. When spot prices turn negative it is a clear sign of too much supply. Under these conditions, generators that can, should wind back their output. Longer term trends will tend to reduce these instances; the progressive retirement of relatively inflexible coal plant and the rise of dynamic demand response presaged by the Energy Security Board’s two-sided market plan.

So, AEMO’s study is focussed on the first two limitations. They exist because system security is non-negotiable, but they are the result of stop-gap solutions that will become less tenable as the proportion of VRE rises. Under AEMO’s central forecast scenario, VRE could reach up to 75 or 80 per cent of underlying demand at individual points in time. This metric, which AEMO calls instantaneous penetration, is key, given that maintaining system-security is a minute by minute -or even millisecond by millisecond job. It should not be confused with the overall contribution of VRE to the energy mix, which is an average figure over time.

AEMO has set itself a long to-do list in order to better equip itself for these challenges, but it also notes the importance of regulatory and market reforms. Notably this includes the development of some form of “day-ahead” scheduling to allow it to be confident that the generation mix at any given time will deliver a secure system and give it time to procure additional system security services  if required.

The underlying subtext is quite clearly that AEMO cannot wait for the outcome of the post-2025 review to get this right. This at least partly explains why that reform process has morphed into a series of staged reforms starting now and continuing through 2025 and beyond. Effectively it has turned from a potential “big bang” market redesign into an ongoing, evolutionary program.

In the case of rooftop PV, the challenge is compounded because AEMO has no real visibility or control over the combined output (which can exceed the largest individual generators on the system). Solar output can “disappear” en masse quite quickly as a result of either a sudden cloud or through voltage fluctuations tripping off material number of solar inverters. The scale of this rapid swing in output grows with the overall capacity of rooftop PV and in South Australia will soon exceed the largest contingency that AEMO plans for in the region, which is the loss of the largest single generating unit at Torrens Island power station.

AEMO is recommending that over the next 12 months, the sector needs to develop minimum technical standards and device level requirements for rooftop solar to cover security (system and cyber) communication, interoperability and generation shedding capability. It warns that without these reforms, it will have to instead put hard limits on passive rooftop solar in each region which would lead to either a moratorium on new installations or “costly refit” of existing systems. Either way, there are changes coming that will shock household owners of rooftop PV who have swallowed the line they have been sold by politicians and activists that their solar system is an unalloyed good.