State governments may have to spend billions of dollars to duplicate the electricity network to cope with the unreliability of renewable energy sources such as wind and solar, according to the national energy forecaster.
As the Australian Energy Market Operator released a report that found there could be reliability issues for the South Australian market, which has embraced renewable technology, its chief executive, Matt Zema, said the rise of wind and solar could also create problems throughout the country.
“It is becoming more and more of a challenge. We might need to build another interconnector to the South Australian market to improve reliability and in the longer term another bigger loop across the nation to be a back-up,” Mr Zema told The Australian Financial Review.
Electricity prices spiked in South Australia late last year after problems with the Heywood interconnector to Victoria, effectively cutting off South Australia from the NEM. South Australia did not have enough of its own locally generated power to cope with demand, which significantly pushed up prices.
A joint report between AEMO and South Australia’s electricity transmission company Electranet found there will be ongoing issues with controlling reliability in the state’s power network either during or following any future loss of the Heywood interconnector and the closure of coal-fired power stations.
Interconnectors are high-voltage transmission cables connecting electricity markets.
“Measures can be taken in the short term to address some of the immediate operational effects, but as the power system continues to evolve, in the longer term there could be an increasing need for changes to market arrangements or infrastructure to continue to meet security and reliability expectations, particularly at times when SA is synchronously islanded [separated] from the remainder of the NEM,” the report found.
AEMO is conducting further studies to maintain power system security in South Australia if it becomes isolated from the NEM.
Grappling with implications
Mr Zema said state governments were still grappling with the implications of moving away from the more reliable coal and gas-fired generation. He said they may have to invest billions of dollars in a back-up “loop” of interconnectors to ensure there are not reliability issues which could lead to blackouts.
“South Australia is at the front end of this [renewable] curve, Tasmania is not far behind as they are finding out with Basslink [connection to the mainland,” Mr Zema said.
“If you build another interconnector to Victoria you may well extend it from Victoria to NSW.”
A new interconnector between South Australia and Victoria which would cost about $1 billion.
Mr Zema said the only alternative to building back-up interconnectors or more gas-fired power stations to cover for wind and solar – when the sun isn’t shining or the wind is not blowing – would be to dismantle the NEM.
“You either strengthen the grid and have more reliability and more paths or you break it up and its gets smaller and smaller and each state becomes an island,” he said.
“You either become better connected to the grid or you become your own grid which would result in huge price fluctuations.”
South Australia is leading the charge towards renewable energy, especially with the closure of coal-fired power stations, including Alinta Energy’s coal-fired power stations at Port Augusta.
South Australian Premier Jay Weatherill last year said the price fluctuations would not last and the state would benefit from leading the adoption of wind and solar power.
The precarious nature of the electricity network was further demonstrated by Tasmania also being isolated due to problems with the Bass Strait undersea power cable.
Victoria’s energy market could also be facing an overhaul with Alcoa’s Portland smelter – a large energy users – close to closure. It is negotiating with AEMO about an energy subsidy for its poles and wires.
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