Australia’s grid could handle a huge leap in renewable power by 2025
Australia’s main electricity grid will be able to accommodate up to 75 per cent renewable energy as soon as 2025, a higher share delivered sooner than the most optimistic previous assessments.
Such a leap in renewable power on the grid could be managed by changes in market rules and regulations, the Australian Energy Market Operator, which manages the nation’s energy system, has said in a new study.
“Australia has the technical capability to operate a power system where three-quarters of our energy at times comes from renewable energy resources,” Audrey Zibelman, AEMO’s chief executive, said.
The tumbling cost and speed of building new solar and wind farms has already helped expand clean energy’s share to about a quarter of the National Electricity Market. As recently as February, the Energy Security Board was predicting clean energy’s share of supply would be 40 per cent by 2030.
On Easter Saturday, renewables’ share of the NEM – which provides power to about 80 per cent of the population – topped 50 per cent.
There have been concerns that Australia’s grid, which was designed to connect to a handful of large scale generators, would not cope with the array of solar panels and wind turbines.
But in the new report, AEMO says it believes careful regulation of power generation can overcome these concerns.
Achieving the three-quarter share will need changes in markets and regulation otherwise AEMO will have to impose curbs on renewable energy to ensure grid stability, Ms Zibelman said.
If such adjustments don’t happen, “AEMO will be required to curtail the contribution of these wind and solar resources to 50 or 60 per cent of their potential even though they are the lowest cost way of providing electricity”, she said.
Energy and Emissions Reduction Minister Angus Taylor said Australia was installing renewable energy at 10 times the global rate on a per capita basis but AEMO’s report highlighted challenges of maintaining that pace.
Mr Taylor said renewables had to be complemented by instantly dispatchable energy “such as a gas-fired power station [that] will be crucial to maintaining the security of any large power system”.
AEMO earlier this week revealed more about its view of the future grid in a note to stakeholders about the role technologies such as pumped hydro and batteries will play.
The cost of building new transmission lines has risen about 30 per cent compared with initial estimates in its Integrated System Plan (ISP). For new gas-fired plants, the cost blowout is in the order of 30-60 per cent, AEMO said.
Pumped hydro, which is seen as an important back-up for renewable energy, could turn out to be 50 per cent more expensive than estimates in its draft ISP.
“[I]t was recognised that there are higher risks and barriers to investment in pumped hydro compared to other forms of storage, as evidenced by the higher number of utility-scale battery projects currently being planned across the NEM,” AEMO said. Big battery costs may be 30 to 40 per cent cheaper than earlier forecast.
Despite those revisions, an AEMO spokesman said they did “not apply to the Snowy 2.0 project”, the $5 billion-plus plan announced by the Turnbull government to expand Snowy Hydro’s existing capacity.
“[T]he pumped hydro cost increases referred to in the ‘progress update on 2020 ISP’ only apply to future, and as yet uncommitted, pumped hydro projects in mainland Australia,” he said.
“The [AEMO] changes suggest a scenario or sensitivity without Snowy 2.0 is even more worthwhile to investigate than it already was,” said Dylan McConnell, an energy expert at Melbourne University.
“The 2018 ISP essentially showed Snowy 2.0 crowded out other storage options,” he said. “Assuming this is the case – and the cost updates are accurate – then Snowy 2.0 is more unlikely to be the least-cost solution.
Mr Taylor, though, defended his government’s support for the giant project: “Snowy 2.0 is the cheapest option to deliver both the necessary firm capacity and large scale storage within a single project.”