AEMC: Gearing the system to handle changing market mix

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AEMC

The report will surprise many. There is in fact enough generation capacity, or MW, in the power system over the short and medium term Australia is not running out of electricity right now. But we still have a problem. The national grid has become more unstable with more weather-driven generation in the mix. The technical characteristics of power production have changed and we have to manage the power system differently.

In 2016-2017 the power system dropped outside secure technical limits on 11 occasions, including South Australia’s system-wide blackout. This is particularly concerning. The electricity rules require the system to be returned to a secure state within 30 minutes after an incident. Failure to do so risks damaging equipment and can turn short supply interruptions into much longer ones. Eleven incidents within 12 months is historically high, up from seven the year before, four in 2014-15, and two and one in the years prior.

Fundamental changes are underway as old coal-fired power stations continue to close at the end of their operational lives. The past decade has delivered big volumes of capacity from weather-driven generation like wind and solar – all part of helping the nation meet its emissions reduction targets. The challenge is to make it possible for renewables, and any new generation, to be incorporated into the power system, safely.

Power system frequency is less stable for technical reasons. The details are eyeglazing but in overall terms the changing generation mix is making the system harder to control. There is less time for the operator, AEMO, to recover the grid from sudden equipment failures before frequency collapses and blackouts happen. But this problem can be solved. There is room for optimism and things are already improving.

The Commission is prioritizing new rules to help AEMO change the way it manages the power system. To date we have already made several rules to help the immediate situation, and there are more to come. Fixing system security is not a headline grabber. It involves many, small technical measures. Each on their own may not sound dramatic but they are vital to securing the system for consumers.

There is no silver bullet – but we are putting in place new and targeted grid management frameworks that address these issues.

The new rules include new last line of defence schemes to help the operator prepare for emergencies and frameworks to maintain system strength above minimum levels identified by AEMO. There was much more detail to that reform package but it’s worth mentioning new generators now have to pay for any extra equipment or services needed to maintain system strength, before they can connect to the grid.

Some 10 steps have already been taken to tighten power system security arrangements and put more tools in the hands of the operator under the AEMC’s system security and reliability action plan. Another four major reviews of policy are happening in 2018.

We also released a second report today for our frequency control review. It notes trials of new kinds of windfarm technology that can help maintain grid security – a great example of how technology is responding to the changing economic and security needs of the power system.

The frequency control report recommends ways of better enabling distributed energy resources like batteries to provide services that would help keep the power system stable. We are seeking community views on this next package of proposals to restore frequency performance.

The national electricity market is now a closely interconnected system of renewable and non-renewable energy generation sources and technologies that need to interact effectively. We have a once-in-a-generation opportunity right now to secure the future of renewables and new technologies in this new-look grid.

From a customer’s viewpoint it doesn’t matter whether a blackout happens because there is not enough generation or demand side capacity available when needed (reliability) or technical stability (security). For those who operate, regulate and make policy, the distinction is vital to understanding the right priorities for keeping the lights on and prices down.

Meanwhile we continue to work on the other most pressing issue in the market today – finding the lowest cost ways to restore system security by addressing the technical complexities brought on by changing energy technology.

By Anne Pearson
Australian Energy Market Commission
Chief Executive

This post was published on March 20 by AEMC and in The Australian.