It is undisputed that the energy industry - both globally and here in Australia – is undergoing unprecedented change.

Energy Live has previously outlined the key disruptors reshaping the industry and delivering tangible impacts. In this article, we take a closer look at some of these disruptors and what they mean for Western Australia. 

First, a few facts about the South West Interconnected System (SWIS):

  • It delivers about 18 million megawatt hours of electricity to over 1.1 million households and businesses annually.
  • It incorporates 7,800 kilometres (KM) of transmission lines and a further 64,000 km of distribution lines.
  • Three out of ten Western Australian households now have rooftop photovoltaic (PV) systems installed, totalling almost 1,100 MW capacity. This means collectively, rooftop PV is the largest energy source in the SWIS.
  • All-time peak demand is about 4,000 megawatts (MW), average demand is 2,000 MW and minimum demand is about 1,200 MW

The SWIS, like the National Electricity Market (NEM), continues to experience rapid growth in renewable resources, both on a utility and consumer scale. AEMO is projecting 790 MW of utility-scale renewables to be installed in the next five years, and almost double that (1,400 MW) in rooftop PV over the next 20 years. Utility-scale renewables provides low carbon, low cost energy and rooftop solar has enabled customers with choice, and reduced their bills and carbon footprint.

These rapid changes have also transformed the way the power system operates and has increased the variability in the system. AEMO has done some in-depth analysis on these challenges and outlined recommendations for the way forward.

For instance, essential system security services such as inertia, frequency control, system strength and voltage control, services typically delivered by traditional generation resources will soon be at inadequate levels, as the world inevitably transitions towards variable energy generation resources.

From a market perspective, balancing prices are showing greater spread, going more and more negative in a growing number of trading intervals. This ultimately distorts the relevance of those price signals and does not deliver intended benefits to customers.  

In this changing context, whilst AEMO continues to improve its operations, significant changes to regulatory and technical standards are needed to facilitate the transition and keep the power system secure. The incorporation of new technologies such as energy storage systems and synchronous condensers into the grid, could address some of the technical challenges we are observing. 

However, market and regulatory changes that enable consumers to continue to have choice, and result in the optimum mix of resources to achieve the energy trilemma of security, affordability and sustainability, is the objective. For example, rewarding the provision of essential services would similarly encourage both traditional and new generators to deliver these services in the most efficient manner possible. 

These experiences are not unique to Western Australia, or the rest of Australia. Ireland, the United Kingdom, the states of California and Texas in the United States have all encountered similar challenges in integrating new generation technologies to the grid. Changes made in these other locations, at renewable penetration levels similar to those forecast in the WEM, confirms changes are needed and possible to facilitate the energy transition and hence realise the significant opportunities.

The WA government’s WEM Reform Program will bring about critical foundational changes underpinning AEMO’s ability to effectively manage the energy transition. However, beyond the WEM Reform Program, AEMO recommends the following actions to address the challenges and harness the opportunities presented:

1. Integrated System Planning – AEMO to deliver a SWIS-specific strategic development plan, based on sound engineering and economic analysis, with key input from Western Power and broader input from stakeholders.

  • Energy storage in the SWIS – AEMO to work with the Economic Regulation Authority, Western Power, industry and state government to progress regulatory reform and rule changes to enable the registration, connection and operation of energy storage systems by the end of 2019.
  • System security technologies – AEMO proposes to complete a detailed technical, economic and regulatory evaluation that will look at the cost, optimal locations and technical requirements for the installation of technologies that will help manage system strength and inertia.

2. Distributed Energy Resources (DER) Roadmap – AEMO to develop a DER Roadmap that identifies the critical requirements and changes that will ultimately incentivise the use of DER to achieve lower cost outcomes for all consumers.

  • Distributed System Operator and Distribution Market Operator functions – AEMO to work with Western Power and the Public Utilities Office to introduce the function of Distribution System Operator, to properly manage the integration of electricity supply from the distribution system (ie rooftop PV) into the wholesale market and transmission system. AEMO, together with Energy Networks Australia, is currently working on a national framework that will enable the coordination and optimisation of DER in the network.
  • Update inverter standards – AEMO proposes to work with Western Power to progress amendments to existing Australian Standards to integrate improvements that will contribute to system security. AEMO is already working with Energy Networks Australia and Distribution Network Service Providers nationally on similar standards. 

AEMO looks forward to working closely with the WA State Government and our stakeholders on the west coast to progress reforms to the WEM, ultimately delivering secure, affordable and lower carbon energy for West Australians. Western Australia has great resources, customers willing to participate and still has the time to implement the changes to successfully facilitate the energy transition before the significant no action power system and market implications occur. 

As AEMO’s CEO Audrey Zibelman stated at a recent CEDA event in Western Australia, “we have the perfect opportunity -   we just need to get on and go for it.”