The headline in the SMH was
Australia’s energy operator proposes ‘fast change’ scenario to cut emissions by 52 per cent by 2030
Greenhouse gas emissions from the electricity sector would be reduced at twice the rate proposed by the Turnbull government under a radical new plan outlined by the Australian Energy Market Operator.
The “fast change” model puts the public operator on a collision course with policymakers after AEMO outlined a potential cut of 52 per cent to all electricity emissions by 2030, double the rate required to meet our Paris climate change commitments.
The bit I’ve highlighted was wrong. AEMO charted a doable scenario double the rate specified by the Turnbull government, but it was derived from the ENA CSIRO Low Emissions Technology Roadmap, which looked at what would be required to meet the 2°C target under the Paris Agreement. AEMO says ENA and CSIRO:
- found that for the broader energy sector to meet a proportional target of 26-28% emissions reduction by 2030, electricity sector emissions may have to reduce by 52-70% by 2030 and 90% by 2050. AEMO intends to apply an emissions reduction constraint of 52% by 2030 and 90% by 2050 in the Fast Change scenario for the ISP [that is, the Integrated System Plan].
In other words, AEMO is looking at what the government should be doing as well as what it is doing, thus showing commendable independence.
To back up, AEMO is developing an Integrated System Plan for the NEM which arose from two sources. Firstly, the Finkel Review said AEMO:
- should develop an integrated grid plan to facilitate the efficient development and connection of renewable energy zones across the National Electricity Market.
And secondly, AEMO would normally do a National Transmission Network Development Plan (NTNDP) for the Australian Energy Regulator (AER).
It has wrapped both into one to develop a nationally integrated strategic plan which takes into account the challenges and opportunities facing the grid during the transition to renewable energy. The consultation draft (linked above) was published in December 2017, which evoked a number of submissions. The final is to be published in June 2018.
The aim was to identify renewable energy zones (REZ) and how they might best be linked.
It assumes that new generation will be mostly wind and solar PV, with pumped hydro and/or batteries for storage. It considers some geothermal but appears to neglect concentrated solar with molten salt. It notes that the new technologies are cheaper and amount to about 82% (representing about 19 GW of capacity) of new generation projects in development (the remainder is mostly GPG projects).
These new projects are likely to be located some distance from existing generators.
They show an interesting pattern of how the wind blows over 24 hours in the various NEM states, with an overall profile of solar:
Of interest, I heard recently that global average winds have been slowing down, apparently as much as about 20 per cent since the 1970’s, they thought because wind depends on temperature difference, which is evening out.
The other big driver is the closure of aging coal. This image shows the expected closure of plants when they reach 50 or have been announced to close earlier:
AEMO decided on doing three scenarios – business as usual, bookended by ‘slow change’ and ‘fast change’ alternatives. The difference in the rationale between BAU and slow change is not clear to me, but the Queensland and Victorian 2030 targets are not included beyond 2020, I think because they don’t have bipartisan support. In the summary of submissions they have introduced the concept of a ‘high DER’ scenario. DER equals ‘distributed energy resources’.
In forward planning the period from 2030 to 2036-37 has significance, because ~10 GW of coal generation is projected to retire. Here is the generation mix capacity to 2036-37 under a “neutral” scenario:
which is markedly different from projected output:
Energy storage only becomes prominent after 2030.
Transgrid in their Stage Two Submission saw an even stronger role for rooftop PV:
That graph was sourced from Energy Networks Australia and CSIRO: Electricity Network Transformation Roadmap.
There is general agreement, however, that the future will bring an emphasis on distributed energy resources (DER).
In plotting renewable energy zones they looked at where the wind and solar resources are:
where the pumped hydro sites are:
and then scored wind and solar using a variety of criteria, including distance from customers, topography, land availability, transport service etc. to come up with this:
Finally, they identified renewable energy zones:
Thing is that when you look at system strength, things are a bit stretched in places, especially northern Queensland and western Victoria and SA outside Adelaide:
Powerlink in their submission mentioned the chicken and egg problem. Should transmission companies build in anticipation of renewable energy developments? If the power is not there it takes a brave developer to go out alone. But restricting new developments to places where there is grid access means some of the best sites will go begging.
- Major transmission investment can be achieved at lowest cost due to economies of scale. For example, the cost of installing a 500 kV transmission line to connect a new renewable energy zone is around double the cost of a 330 kV line, but delivers around three times the capacity.
Powerlink wanted AEMO to publish the MLF (“marginal loss factor”) for each REZ. This is a serious issue, and relates to the loss of power between where it is generated and where it is used. AEMO has just slashed the output calculations for a range of wind and solar farms especially in north Queensland, in western NSW and Victoria. Many projects have suffered cuts of between 10 and 22 per cent.
Transgrid looked at the prospect of 8000 MW of coal shutting down in NSW by 2036. Trangrid have had enquiries amounting to around 30,000 MW of prospective new power generation interested in grid connection. They say (para 1.2):
Distributed Energy Resources (DER) will play a growing role in Australian energy markets. Australia already has some of the highest rates of rooftop solar PV penetration globally, and as technology costs continue to decline, uptake of solar, energy storage and other behind-the-meter technologies will continue to grow. In the Electricity Network Transformation Roadmap, Energy Networks Australia and CSIRO forecast that by 2050 around 30-50% of electricity generation could be sourced from DER under some scenarios (up from about 3% currently).
- even in a scenario with high DER uptake, the volume of electricity supplied from large-scale generation and delivered via the transmission and distribution networks does not decline.
Trangrid looked at potential generation zones in relation to where the enquiries were coming from, and came up with this:
The zones have the potential for in total 65 GW of high quality generation. The future does not need to be parsimonious in use of power. Please note they see two interconnectors north to Queensland and three south to Victoria.
All that would seem to be encouraging, but in the AFR we had Danny Price attacks AEMO’s Audrey Zibelman over ‘power grab’.
- He said “the fact that one of the key NEM (National Electricity Market) organisations feels it appropriate to make such an audacious, public grab for power” ought to alarm investors and “any right thinking policy makers that may be left in government about what is happening to a key NEM institution”.
He wants her dismissed immediately. Seems he may not understand that she was only doing what was asked of her. Leaving aside Snowy 2.0, the states are responsible for electricity systems. Perhaps her sin was to suggest that the fast track could be taken by reverse auctions, as has already happened in SA, ACT, Qld and Victoria to good effect. Her mortal sin was probably no mention of a carbon tax, which then leaves it to the market to pace change. AEMO has shown the possibility of states using their brains to shape the market, and speed it up in a coordinated way.
I think this exercise has also shown that the planning horizon needs to go beyond 2030.
Also, the notion that the future will be, in the main, decentralised solar and wind, with Transgrid repeating the levelised projected costs of generation:
Apart from propping up coal looking like a real option in terms of cost, we need to remember that generation only forms 20 to 25 per cent of the customer’s power bill while the network accounts for 50 per cent or more. I plan to look at this in my next major climate post, but no-one I know is doing forward projections.
For the full AEMO consultation paper see Integrated System Plan (ISP) for the NEM.