Australia no exception to rules of wind integration
Interconnection capacity in the Australian grid might be limited compared to the relatively strong networks across most of northern Europe, but this is not perceived as a handicap to a significant penetration of wind into the various state power systems. "International experience has established that lack of interconnection capacity is no barrier to significant energy penetration of wind when measured relative to energy use in one jurisdiction," Econnect Australia's Tony Morton says.
In the states where most wind power is being developed, South Australia, Victoria, New South Wales and Tasmania, Morton points out that the interstate interconnectors are only small in absolute terms. South Australia's import capacity of 720 MW from Victoria is 20% of its installed generating capacity of 3700 MW, 24% of its peak demand of 3000 MW and 50% of its average demand of 1400 MW, he says. Meantime, Victoria's 1900 MW interconnector with the huge Snowy Mountain hydro electric facility in the South Australia Alps is 22% of its installed capacity of 8800 MW.
According to Morton, New South Wales, Australia's most densely populated state, has import capacity from Snowy equivalent to 27% of installed capacity and import capacity from Queensland equivalent to 9% of installed capacity. Furthermore, the new Basslink interconnector between South Australia and the windy island state of Tasmania has a capacity of 480 MW, which is nearly one-fifth of its installed generation capacity.
Given these facts, there is no reason why each individual Australian state in the National Electricity Market (NEM) -- New South Wales, Victoria, Queensland, South Australia and Tasmania -- should not be economically capable of achieving wind energy penetration levels of at least 20-30%, the level at which wind can be added to a system before a cost penalty becomes significant.
Western Australia and the Northern Territory are special cases as they are true electricity production islands, says Morton. But Econnect's prior experience with island networks suggests that high wind energy penetration levels can be achieved, albeit at a cost.
One of the most active wind developers is utility Pacific Hydro, with wind projects in South Australia and Victoria and hydro electric projects in Victoria, New South Wales and Western Australia. The company's Kate Summers does not disagree with Morton. The amount of wind the system can tolerate will be dependant on accurate forecasting systems, she says, which tell system operators how much wind power is on the way. "It's always going to be a balance between the characteristics of the aggregated wind power and the existing generation and load in the region. To this extent small regions such as Tasmania or South Australia, having peak demands of about 1700 MW and 3000 MW, respectively, and limited interconnections, will reach an early saturation point. It will depend on the ability of the system operator to manage the system despatch," she says. South Australia's average demand, however, is only about 1400 MW.
"Get the forecast right and the market will compete to supply the changes," says Summers, referring to the requirement for increased reserve once wind penetration starts to move significantly beyond 20-30%. Australia's National Electricity Market Management Company (NEMMCO) has recognised the need. It is currently seeking expressions of interest from parties worldwide who can offer solutions for forecasting wind energy generation and demand for the NEM.
A learning process
The level of knowledge among power industry players on whether the limitations on wind are technical rather than economic varies considerably. The Business Council for Sustainable Energy's Tristan Edis says the notion of the limitations being technical is wrong. "The limitations are largely the other way round. They are economic," he says. Coal can pollute with impunity with no economic penalty, says Edis, yet the notion of paying a small amount for an increase in power reserves to allow for more wind on the system is shunned.
Studies for Australia, the UK and the US have illustrated that using currently available technology, wind can make up at least 20% of power supply with minimal impact on reserve levels and without threatening the stability of the grid. Penetration levels of wind will soon be 15% of electricity supply in South Australia. But in other states they have not even reached 1%. There is huge room for growth without encountering technical or economic barriers, says Edis. "But this won't occur when one is free to pollute with greenhouse gases."
Sustainable energy lobbyists may have got the message on the technical and economic feasibility of high levels of wind in Australia, but it has not permeated into the power industry at large, suspects Econnect's Morton. "The general impression we gain from our experience with utilities is that there is a natural concern with the integrity and security of networks," he says. Utilities and regulators, specifically NEMMCO, pay great attention to the technical issues in the connection of wind generation.
The responses of Western Power's generation, network and retail business units on a report by Econnect on the barriers to variable generation in Western Australia are on public record. They indicate that network utilities see the barriers primarily as technical, says Morton. Meantime, incumbent generators worry about wind's impact on the technical efficiency and economic viability of conventional generating plant, fully aware of wind's "must run" nature -- no well-functioning market will be geared to reject wind in favour of burning coal or gas.
Summers says increased wind generation will lower the wholesale market price. "It's likely to cause concern for the incumbent generators that are dealing with large bank debt and generally struggling with the current market price. Until the system operators are happy that they have adequate measures in place to manage the power flows on the system for high levels of wind penetration then the issues will be considered technical."
The bottom line
Morton says that "little or nothing" has to be done in the immediate future to allow for more wind power on the network. All that is needed is a focus on network augmentation, with plans for some reserve plant in the longer term. "Evidence suggests that at wind penetration levels up to ten per cent, the existing operational reserves put in place to cover any instantaneous loss of the largest conventional generator are also sufficient to cover the longer term loss of geographically diverse wind generation," he says. The provision of additional reserves becomes relevant only at wind energy penetration levels above 10%, which is equal to 30% of generating capacity. "Quantifying the additional requirement is difficult and depends on factors such as the existing mix of generation plant and the efficacy of forecasting."
Will costs of assimilating wind in Australia be higher than elsewhere? Maybe not. "We do not expect that specific factors in Australia will lead to higher financial costs in absolute terms for assimilating wind than in any other jurisdiction, particularly since renewable energy is being developed in Australia according to a least cost rather than a "guaranteed price" framework," says Morton. The main issue is that electricity costs in Australia tend to be relatively low due to the prevalence of inexpensive coal and gas-fired generation and the lack of mechanisms for pricing carbon emissions. "We do not expect that this situation can persist indefinitely," he adds. "Wholesale electricity prices will increase in future for reasons other than the need to assimilate renewable generation, just as they have in Britain and North America."
Summers takes a more cautious approach. "All power systems have the same physics, what changes are the market mechanisms that have been implemented. There are a number of issues in our market that need resolving before we complicate them by adding wind. Our demand is smaller than the US and our system is the longest and therefore prone to the wobbles -- we are sensitive to anything that may cause oscillations. I think it will just take time and experience before the system operators become more familiar with wind power and learn to address the changes that it injects into the system."
Edis brings it back to the government and advocates getting the right policies in place. "We need to put in place government policy that will get the market to take into account the cost impact of greenhouse pollution upon society. One way of correcting this problem is via a policy such as legislated targets for renewable energy or feed-in tariffs that provide a price premium for low greenhouse emission forms of generation," he says.