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In a previous energy and renewables brief, we covered the first report of AEMO’s Renewable Integration Study (RIS) - a multi-year plan to maintain system security in a future NEM which is expected to have a high penetration of renewables.
Australia has experienced significant growth in distributed solar PV (DPV) in the last decade. Parts of the NEM, in particular South Australia, have one of the highest DPV uptakes in the world. In 2019, the maximum instantaneous penetration of DPV in SA was 64%, and by 2025 it is expected to reach 85%.
This high penetration of DPV can also be seen in the state’s minimum demand shape- with a deepening of the ‘duck curve’ during the daytime and the decreasing trend of minimum demand correlated with the increase in DPV capacity.
The high uptake of DPV presents some challenges in the operation of our grid. DPV systems are largely operated ‘behind-the-meter’, meaning that distribution networks (DNSPs) and AEMO have little visibility or control over their operation. In SA, DPV is effectively the state’s largest generator and it is not controlled by AEMO, which they have described as ‘driving without headlights’.
DNSPs are already facing challenges related to voltage management, phase balancing and other power quality issues on the LV network. At a network level, the variability and unpredictability of DPV output could impact AEMO’s ability to manage the system using existing contingency management practices in times of emergency.
The report contains several actions which will facilitate network operators to have greater control over DPV in emergency situations. This could allow AEMO to curtail or switch off individual inverters and reduce the amount of generation output into the network. There are technical and regulatory hurdles to overcome including equipping inverters with the communications technology to allow remote control and the regulatory framework to permit this. In Victoria, any inverter installed through the government’s Solar Homes program must now be equipped with on-board communications.
Some solar system owners are unhappy with the proposed changes which may ultimately allow external authorities to switch off or reduce the generation from their solar systems. However, all consumers do ultimately pay for the negative impacts of poor power quality and network security through direct impacts on the lifespan of household devices or through their contribution to higher network charges. The alternative to greater control is blanket bans or permanent constraints on DPV which is already occurring in weaker areas of the network.
The RIS is a multi-year plan and the proposal for centralised control of DPV will be one of many instruments which will help enable Australia’s energy transition.
This blog was co-authored by Ashley Wah.
Kumar is a Partner in the Financial Advisory practice and is responsible for the Energy and Resources Sector. He specialises in portfolio management, policy advice, commercial and financial analysis, market modelling (electricity, gas and renewable energy), strategic positioning and assisting clients with growth strategies. Kumar helps his clients make future decisions with confidence.