Keeping the Green Lights On: Experiences from and Comparison with the Australian National Electricity Market

By Pierluigi Mancarella

Power systems worldwide are undergoing unprecedented changes and experiencing significant challenges, particularly in terms of reliability, while attempting to transition towards a low-carbon energy system. The “Staff Report” has outlined several of these challenges and potential solutions for the case of the US power system, especially in terms of potential reliability issues in operating regions with large-scale penetration of Renewable Energy Sources (RES). Similar issues are experienced in the National Electricity Market (NEM) in Australia.

Most RES, and in particular wind and solar, may be highly variable and partly unpredictable. Furthermore, most of them are “asynchronously” connected to the grid through power electronic interfaces. This practice means that rotational kinetic energy (associated to the concept of system “inertia”), which is naturally available from conventional synchronous generators and helps stabilise the system frequency following disturbances, is removed. These characteristics may generally deteriorate the security level of the system and call for more operational flexibility as well as faster and tighter frequency control mechanisms, amongst other issues. On the other hand, from a market perspective, RES are economically displacing conventional generators, particularly the ones based on gas and coal, which have historically been the main providers of system flexibility and security.

These issues are all well elaborated in the “Staff Report” and are, in many instances, already accounted for in Australia. In particular, the South Australia Blackout of 28 September 2016 could effectively be considered a “resilient” event (on the basis of the extreme weather conditions that were experienced then), despite the fact that other factors such as unexpected protection operation played a key role. Nevertheless, the event brought attention onto the need for reviewing operational and planning practices in terms of provision of reliability in the presence of large-scale penetration of RES.

The Chief Scientist’s Review into the Future Security of the National Electricity Market (also known as the “Finkel Review”) thus aimed to identify the key security challenges that a low-carbon NEM could experience and looked into potential strategic solutions. Amongst several recommendations, the “Finkel Review” advised towards (i) the development of minimum levels of inertia in different regions, in order to improve the system ability to withstand component contingencies, and that (ii) new generators (including RES) should ensure that adequate “dispatchable” capacity is present in all regions by using a variety of technologies or partnership solutions. Effectively, this opens up new opportunities for technology-neutral solutions and commercial arrangements to be developed, which is very much in line with what is recommended in the “Staff Report”.

The author’s system security assessment modelling and the studies performed for the “Finkel Review” suggest that a mix of new and “old” technologies, new operational tools, and new market services and designs may be required to economically deliver security in a low-carbon NEM. The new technologies that could/should be considered, in particular, are not limited to battery storage (which immediately springs to mind!), but should include a broad range of resources, including provision of frequency control and voltage/reactive power ancillary services from RES and the demand side, again in line with what discussed in the “Staff Report”. New operational tools (e.g., for unit commitment and optimal power flow), adopted within new market arrangements and services, could also be crucially important and should consider inertia levels, very fast active and reactive power response (potentially provided through power electronics-based technologies), and the main drivers for security requirements (e.g., contingency size). This need for new tools, and the relevant R&D required to develop them, is again aligned with the Policy Recommendations of the “Staff Report”.

The Australian Energy Market Operator (AEMO) (also the system operator) has recently issued an “Integrated System Plan Consultation”. The Consultation investigates the potentially optimal mix of transmission, generation, gas pipelines, and distributed energy resources that could “facilitate the efficient development and connection of renewable energy zones across the NEM”, in order to address the “Finkel Review” recommendations. Interestingly, and again aligned with similar considerations in the “Staff Report”, there emerges that gas might still play an important role in supporting low-carbon power systems in either countries. A key conclusion is that electricity and gas “multi-energy” systems are better operated and planned in a coordinated way.

In conclusion, based on a comparison of the “Staff Report” for the US and recent relevant experiences and similar documents for the Australian NEM, it can be appreciated how there is an agreement in the challenges and potential solutions that are needed to transition towards low-carbon power systems. In particular, while the very specific solutions will of course need to be identified on a case-by-case basis, very different systems such as the long and longitudinally developed NEM and the multiple highly-interconnected regions of the US have a lot in common. In this respect, to address the energy trilemma of affordability, reliability and sustainability, new, smart grid technologies that range from different forms of storage to demand response and smart inverters, facilitated by information and communication technologies and real-time or close-to-real time intelligence, will play a key role. However, a key open challenge is of economic nature, rather than technical/technological; that is: how can we drive policy, regulation, market design and commercial arrangements to facilitate business cases for new technologies and (often “non-network”) solutions that can compete on a level playfield with conventional solutions to provide network reliability? As often in the past, the answer (and to some extent the hope) could lie in ingenious entrepreneurs who could completely disrupt the existing market.

This article was edited by Panos Moutis

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