The Reliability Panel of the Australian Energy Market Commission (AEMC) issued its latest market performance review earlier this week.
The report attracted attention particularly around the security of National Electricity Market (NEM) and the impact of an increase in renewables in the generation mix – the report found that there were 11 occasions when the power system operated outside its secure limits for more than 30 minutes and three times when frequency load shedding schemes were triggered in 2016-17. The AEMC’s chief executive Anne Pearson described the multiple times that the system dropped outside its secure limits as “particularly concerning”.[i]
Security of supply is unrelated to whether we have enough supply. Reliability provides insight into whether there is enough capacity – both generation and demand response – to meet customer demand in the NEM.
It’s clear from the AEMC’s assessment that we have enough generation capacity in the short and medium term. As firm, older coal-fired generation has retired there has been increased capacity installed via wind farms and solar PV. So the AEMC has reported on reduced system stability, while we have sufficient capacity and for this reason the AEMC’s Pearson said the report would surprise many.
When considering reliability the review found that 2016-17 was a “unique year” with unserved energy attributed to reliability recorded for the first time in any region since 2008-09.
While there was a single unserved energy event on 8 February last year when 0.00036 per cent of energy demand was unmet in South Australia – still well within the reliability standard. The standard is set at 0.002 per cent of demand for energy being unmet, or at least 99.998 per cent of the forecast annual electricity demand is expected to be met by generation and interconnectors. The AEMC notes that historically there has been very little unserved energy in the NEM.
It does categorise the South Australian reliability incident as significant with the contributing factors of high demand, inaccurate forecasting of generation and load patterns and outages or limitations on older thermal plant
Aside from South Australia there was no unserved energy reliability event in any other NEM region and when it last occurred a decade ago, there was a significantly higher unserved level of energy in both Victoria and South Australia (see Figure 1) than in SA in 2016-17.
To assess reliability the AEMC looks at:
As noted previously (RERT Locker, EnergyInsider 2 March 2018) it is more common for security events (disturbances in the transmission network) to lead to large scale blackouts, such as the September 2016 SA System Black and the January 2007 Victoria-NSW separation. Security events are unrelated to whether there is enough supply available. Dwarfing all blackout causes are localised issues in the distribution network. See figure 2.
Amongst the key reliability trends and outcomes, the Panel also noted:
The panel comments that there are various recent projects that would have an impact on NEM reliability. These are:
Following the conclusion of the reliability standard and settings review, the Panel has proposed to leave them unchanged for the period 1 July 2020- 1 July 2024 because:
The Review Panel noted that system security issues came to the fore in 2016-17. Key system security trends and outcomes highlighted by the Review Panel were:
 At 6pm on 8 February 2017 demand was higher than forecast, wind generation was lower than forecast and thermal generation capacity was reduced because of forced outages. Pelican Point notified AEMO that 165MW of capacity was unavailable.
 LOR3 is the highest level of notice and indicates that there is insufficient supply to meet demand. An actual LOR3 indicates load shedding.
[i] The Australian, 20 March 2018 “Renewables a threat to power security: report”.
In February Texas endured a winter storm that dragged temperatures well below freezing. Electricity generation plant and gas infrastructure proved unprepared for these temperatures and around a third of the state’s effective capacity went offline for some or all of this period, just as demand was spiking to a new winter record.
A perennial discussion in energy market policy is the contest between what we are ultimately trying to achieve: “customer benefits” or “market benefits”. When making market rules, or building monopoly assets, rules require that we assess “net market” benefits. A number of recent government policies have been justified on customer benefit assessments alone.
The economics of traditional plants are well understood, but since their construction, the way they need to operate has changed substantially. This has been driven by a combination of the age of the plants as well as the large influx of renewables, which is changing the supply and demand patterns of the grid.
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