Australia already has the technical capacity to safely run a power grid in which 75% of the electricity comes from wind and solar and, if it gets regulations right, should occasionally reach this level within five years.
A study by the Australian Energy Market Operator (Aemo) looking at how to incorporate more renewable energy into the system while maintaining grid security found wind and solar capacity was increasing rapidly, but the operation of the electricity market could hold it back unless settings were changed.
Audrey Zibelman, Aemo’s chief executive, said the study made it clear that “operating approaches and market frameworks” were becoming less effective as more renewable energy was injected into the grid.
“Australia already has the technical capability to safely operate a power system where three quarters of our energy at times comes from wind and solar generation,” she said.
“However, to do so requires changes in our markets and regulatory requirements. Otherwise, Aemo will be required to limit the contribution of these wind and solar resources to 50% or 60% of electricity supply at any point in time, even though they are the lowest cost way of providing electricity.”
The overall share of renewable energy in the National Electricity Market (NEM) reached 26% over the past month, according to the website Open NEM. It has occasionally risen to more than 50% for brief sunny and windy periods when demand for heating and air-conditioning was low.
The Aemo study, published on Thursday, calls for changes well before 2025 to allow greater use of clean energy, including the introduction of new standards to maximise the potential of rooftop solar panels and construction of new transmission lines.
It says Aemo found no insurmountable reasons why the grid could not not operate securely at even higher levels of wind and solar generation after 2025, especially given the pace of technological advancement.
Key challenges to overcome in the short term include increasing variability and uncertainty in energy supply, dealing with changes in frequency and system strength, and the impact of greater generation from distributed sources, which differ from the traditional model of each state having a handful of large power plants.
The report comes as Aemo celebrates steps taken last week to allow energy generated at five solar farms in western Victoria and south-western New South Wales to resume full power supply into the grid after stability issues were dealt with. The plants had been limited to half capacity for eight months due to grid congestion.
The Clean Energy Council has warned, and academics have found, that transmission and storage limitations are among the greatest roadblocks to the expansion of renewable energy.
There has also been criticism of the Australian Electricity Market Commission, which sets rules for the grid, as being resistant to changes that would accelerate the influx of relatively cheap, variable clean energy.
The report does not mention another often raised roadblock to future clean energy investment: the lack of an overarching national policy to guide the closure and replacement of coal-fired plants.
The National Electricity Market, which covers the grid-connected country bar Western Australia and the Northern Territory, already has 17 gigawatts of wind and solar capacity.
Aemo found under a “central” scenario mapped before the onset of Covid-19 that this could increase to 27 gigawatts by 2025.
Zibelman said Aemo did not underestimate the scale of the work required to successfully adapt the national market, and said the report – the first in a multi-year project – would have far-reaching implications for the energy sector.
“Given the pace and complexity of change in the [market], the study highlights the need for flexible market and regulatory frameworks that can adapt swiftly and effectively as our understanding of the changing power system evolves,” she said.
