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Finkel: Storage burden should fall on wind and solar farms, not system

Chief scientist Alan Finkel has caused created controversy by recommending that individual wind and solar farms be responsible for providing “dispatchable” generation – a “generator reliability obligation” rather than looking at system-wide solutions.

Although many wind and solar farms plan to include battery storage when they are built – such as facilities proposed by Lyon Solar, and say that the combined cost is cheaper than new gas generation – the renewable energy industry is concerned that a blanket rule may not reflect system needs and could add unnecessary costs.

“Many new renewable energy and energy storage technologies and solutions are now available to help manage energy security,” Clean Energy Council chief executive Kane Thornton said in a statement.

“We need to accelerate smart reforms to encourage this rather than introduce punitive measures that would force renewable energy projects to include backup power, stifling innovation and unnecessarily driving up costs,”

The Australian Solar Council and Energy Storage Council also expressed its concern about the potential constraints on new renewable energy generation, without focusing enough on existing generation and networks.

Finkel does identify issue with existing generators, particularly their relaxed “governor” controls which experts say nearly brought the grid to its knees last summer because it meant that gas generators were slow to respond.

Finkel recommends that new wind and solar plants be equipped to provide voltage and frequency response, which the industry accepts. but it is struggling to understand why each new plant would need to add battery storage or strike a deal for “firm capacity” with a neighbouring gas plant.

This idea of stapling was proposed by AGL Energy, but is contested by many in the industry. “Reliability isn’t a function of each individual power station but all of the system,” says Tristan Edis of Green Energy Markets.

“Some business interests are trying to push for individual wind farms and solar farms to provide their own back-up, potentially making it mandatory that they have quite expensive batteries to cover all their available capacity.

“This makes no sense and there are likely to be far cheaper and easier ways to manage the fact that output from wind and solar farms varies.”

Finkel’s own modelling suggests that wind and solar paired with storage or “firm capacity” is cheaper than “baseload” gas and way cheaper than peaking gas. It is around the same price as brown and black coal, even with the coal being excused for their carbon penalties.

The Finkel review says the Generator Reliability Obligation will consist of new obligations for wind and solar generators to ensure reliability is maintained. The a mount will be determined by market bodies in order to maintain system security and reliability.

How much dispatchable generation is required in any region will depends on a number of factors, such as the percentage of wind and solar, the strength of the network, interconnections, the load profile, and expected future trends.

“In regions where dispatchable capacity approaches the determined minimum acceptable level, new generation projects should be obliged to also bring forward new (i.e. not contracting existing) dispatchable capacity to that region.

“This obligation should be expressed in terms of a percentage of the new VRE generator’s nameplate capacity, able to be dispatched for a required time period.

“The new capacity should not need to be located onsite, and could utilise economies of scale.” It suggests that multiple wind and solar farms could “pair” with new battery storage array or gas fired generation.

It seems particularly designed to control the deployment of wind and solar in more ambitious state-based targets.

“If technology cost reductions or policies such as more ambitious state and territory based renewable energy targets lead to very high levels of VRE in a particular region, the Generator Reliability Obligation would ensure that adequate dispatchable generation is also brought into the market to maintain reliability.”