By Phil Kreveld
As erstwhile partners can attest, the economic consequences of a breakup highlight the fact that reconciling differences constructively is always far less costly.
It is a suitable paradigm for the rule-making body, the Australian Energy Market Commission (AEMC). It must preside over the maintenance of the marriage of old and new forms of electrical energy generation while things are made more difficult by an increasingly independent offspring, rooftop solar.
Let’s put aside the fluff about technology agnosticism, flexible and market driven solutions, etc., and recognise that our investment in poles and wires matches that of the USA with 15 times our population. It is also heading north—as are network charges.
That’s due to uncoordinated investment in a heap of hardware—phase-changing transformers, synchronous condensers, var compensators, reactors, and infrastructure to support this stuff—all adding to the cost of long transmission line projects.
Related article: Why Australia’s electricity grid needs marriage counselling
Tuning takes coordinated government effort
The national electricity grid is like an increasingly out-of-tune harpsichord, with lots of individual companies and organisations plucking at the strings to ‘improve the sound’. As further explained, there is a practical solution. But first to point out a gross deficiency in planning and grid development.
The Regulated Asset Base (RAB) through which networks get permission to build stuff (and charge the punters via tariffs) needs to be be changed. The Commonwealth Government from now on should become the investor and owner in all grid augmentation—and transmission line projects not already in progress. It is the only way to coordinate grid planning on an economical basis. If that is not done, network charges will dominate increasingly in electricity tariffs and all the talk about low energy costs will be blather. This is not nationalisation—it’s bringing in another investor whose financial interest is in minimising losses through augmentation measures necessary because of the Capacity Investment Scheme and Tim Nelson’s Electricity Services Entry Mechanism.
Grid stability doesn’t need a market—it needs engineering
Tim Nelson admits that the required engineering solutions needed to support the quintupling of todays’ capacity, and facilitated by his ESEM scheme, will hopefully come along as a ‘natural consequence’. Yeah, well it might, but at what cost? For the south-eastern grid in particular, the worst outcome is to have the equivalent of a stack of ‘harpsichord tuners’, all having their tasks by virtue of individual ESEM scheme investors connecting to the grid.
Maintaining grid voltage and frequency stability as well as minimising phase jumps will be an increasingly onerous and capital-intensive business. Mixing metaphors, the Commonwealth Government is needed to ‘herd the cats’ together by way of a single ‘grid stability’ investment vehicle.
Two-way power flow; the elephant in the room
The interview with Anna Collyer, chair of the Australian Energy Market Commission, in the Jan/Feb issue of Energy Source and Distribution, speaks to the tough tasks the AEMC faces.
Collyer states that customers should be at the centre of the transition, not passive receivers of energy. The challenge is in meeting this goal as well as another stated aim by her; conversion of distribution and transmission from passive to active networks, i.e., bi-directional power flow. It is a very sharp identification of a key problem thrown up by the renewable transition and which has a significant bearing on cost of electrical energy. It is also one that technically is being avoided by the Emergency Backstop measure, through which household and SME inverters are switched off in order to maintain minimum power flow in transmission lines. Although roughly two-thirds of domestic and SME do not have rooftop solar, that fraction is dwindling.
As rooftop solar is rapidly maturing to independence, it is straining the union of traditional synchronous generation and the younger ‘electronic’ partner. Collyer’s two-way power flow idea is being strongly resisted by distribution networks because it would mean big additions to their RAB and likely fierce resistance to the increase in their network charges by the Australian Energy Regulator. For transmission projects, the AER view is different since ‘there’s no transition without transmission’. It is proving to be an increasingly vacuous mantra mouthed by energy ministers who will not be around to face the realities of electricity prices increasing in a future beyond their parliamentary terms.
Anna Collyer promotes the idea of electrification for households and this is a good idea for CO2 reduction. The Energy Wallet will allow households to electrify gas and to use electric vehicles to decrease the total energy bill. Combining this with virtual power plant generation, smart charging and demand response for some 4 million households is another good idea even if its execution raises costly engineering measures associated with two-way power flow. Thus the ‘once teenager’ rooftop solar capacity has grown into a fractious adult, with a mind of its own. The two-way power flow could be minimised, at least in theory, by electrification of households, but does not diminish the investment necessary in distribution networks.
Often totally ignored in discussions is the necessity of stable medium and low voltage networks in order to maintain ‘virtual energy independence’ of consumers, whether they have batteries or not. In short, network charges are impossible to avoid, that is to say, by those who do not have consumer energy resources. Technically the only way of operating millions of solar inverters in distribution grids is in voltage following mode. For this, a harmonics-free, phase-stable voltage source is required. Power output is via internal loop control of the inverter DC link capacitor—in essence, an inflexible system, as opposed to voltage forming (grid forming) inverters, some now being employed in large scale, variable renewable energy resources and battery energy systems.
An elephant has made its way into the AEMC. So far it has been ignored—in essence, one might be energy-independent by means of solar and batteries, but should not be able to avoid network charges. And that would have to be the case whether a consumer is energy-independent, or exporting energy. Or, worse, only those unfortunates, without the wherewithal to invest in solar and batteries, would be copping it. It is readily seen that distribution network service providers are being wedged between a rock and a hard place. Ring-fencing doesn’t permit energy trading, so that their only way of having earnings on their asset base is via network charges, currently coupled to energy tariffs.
Hence the big question; inasmuch as tariffs incorporate some 30 to 40% of network charges, how are DNSP asset bases recompensed when less and less inward’ energy is being supplied owing to CER generation?
An obvious method is to charge by means of rated demand/rated power generation capacity, the latter option providing recompense for network augmentation of voltage control resulting from reverse power flow.
Related article: How to bake an electrical mille-feuille
AEMC is caught on the horns of trilemma
Those three horns are (1) increasing generation capacity, (2) increasing network charges, and (3) increased danger of network failure. They make a case for going off the grid—that is not a playful suggestion. Rather it provides a focus on the trilemma. The CSIRO studies on system levelised cost of electrical energy provide insight and a basis for the AEMC to encourage strongly a redesign of electricity pricing
Network failure runs counter to the whole idea of AEMO’s integrated systems plan principle of transmission grids expansion. Most grids in the world grew on ad hoc basis. At first glance there is nothing ad hoc about the ISP. However, it is already evident in spades that in practice ad hoc stability augmentation exposes us to significant grid failure probabilities.
If anyone can counter the trilemma it would in the first instance be the AEMC, but it would have to become far more incisive.
