Power more reliable, but coal still a risk
Report finds risks to power supply this summer and for next five years have fallen but concerns over coal failures remain.
The retirement of coal generators from Australia’s electricity grid and the risk of breakdowns from ageing plants has increased the need for back-up supply and reinforced the case for a payment mechanism to keep coal and gas-fired power stations in business.
The Australian Energy Market Operator’s annual electricity report found risks to the power supply both this summer and for the next five years had fallen due to more renewables, batteries and gas supply being delivered into the system.
However, old coal plants becoming less reliable remained a concern with the risk of more flooding at Victoria’s Yallourn station potentially creating a shortfall in power supplies if it were hit by an extended outage.
AEMO also warned “similar poor levels’’ of reliability at NSW coal facilities were expected this summer, potentially endangering supplies. Breakdowns last summer saw NSW coal facilities operating at only half their capacity, putting pressure on supplies.
AEMO’s report backed a new capacity mechanism recommended by the Energy Security Board which will put incentives in place to stop the early closure of power plants and create long-term signals for investment in dispatchable generation.
“What we’re really interested in is an orderly transition,” AEMO chief executive Daniel Westerman said. “A capacity mechanism has been proven to contribute to that orderly transition in many jurisdictions around the world.”
The outlook for supply remains steady for much of this decade amid a fast-growing switch to renewables. Some 2.2 gigawatts of new capacity will be online by this summer, with the same amount again added in the next five years.
Still, the expected exit of Yallourn in 2028 and NSW’s Vales Point and Eraring units from 2029 would cause reliability gaps in Victoria from 2028-29 and NSW from 2029-30 if no back-up generation or transmission projects were delivered to market.
“The accelerated rate of change in the energy industry has implications for the ongoing financial viability of existing thermal generation,” AEMO report states, referencing coal.
Without new investment, “an early closure of Yallourn would immediately trigger exceedence of the reliability standard in Victoria. Similarly, the early closure of Vales Point and one unit of Eraring would trigger exceedence of the reliability standard in NSW. If unplanned, this exit would pose substantial risk to consumers as there would be little time for the market to respond.”
The rapid take-up of rooftop solar will also continue to transform the power grid with a further 8.9GW of combined commercial and household solar due online by 2025, potentially supplying more than three-quarters of total electricity demand at times by the following year.
While Australia’s world-leading adoption of solar has been hailed for accelerating a transition to renewables, the market operator has grown increasingly concerned by the phenomenon that solar at times generates so much surplus energy that demand falls near zero, destabilising the power system.
Minimum operational demand across the NEM mainland is expected to drop to a record low of 4-6GW by 2025, down from 15GW in 2019.
“Without additional operational tools, we may no longer be able to operate the mainland NEM securely in all periods from 2025 due to a lack of security services when demand from the grid is so low. These conditions may occur earlier than 2025 under abnormal network conditions, such as network and generation unit outages,” Mr Westerman said.
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