Tell them they’re dreaming

Electricity transmission towers against sky (dream)

By Phil Kreveld

Reading the latest consultation paper (September 2021) of the Australian Energy Regulator, ‘Export tariff guidelines for distribution network export tariffs’ one stumbles over a lot of text, finally to arrive at the following paragraph (see p20).

It provides a meaningful statement: “Furthermore, we [the AER] consider that there is little scope for export charges [of solar] to reflect the cost of providing intrinsic hosting capacity for export.”

It is precisely the hosting capacity, and the increase in hosting capacity as more households install solar systems that requires distribution networks to spend serious money.

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The Australian national electricity market (NEM) is heading towards ‘off the grid’ status. As the sun sweeps over the south eastern part of the continent, peak solar generation approaches that of synchronous baseload generation. Rather than spending a lot effort on complicated market designs, there should be an awakening: who needs the grid? Give all those households subsidies to get batteries (the States are very keen to help out), and rather than exporting energy, they can store energy for use during the dark hours.

As is evident from the Australian Energy Market Operator’s studies, the power of solar systems being bought is on the increase, heading north of 5kW and, therefore, if it weren’t for a diminishing group of non-solar consumers, the only task for distribution networks would be the supply of stable voltage and frequency to run those millions of inverters.

Imagining that such a service could simply be the ‘provision of an intrinsic hosting capacity’ is a dream! Maintaining voltage levels, providing protection and keeping those inverters running when phase jumps and other disturbances occur, requires serious capital expenditure.

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The political focus on the cost of electricity is unhelpful and it is the reason why the Australian Energy Market Commission and the AER go through all sorts of gyrations to avoid the inevitable: the close to zero marginal cost of renewables is balanced—and if we’re not careful—overshadowed by the cost of capital in poles, wires, transformers, STATCOMs, capacitor banks, replacement tap changers, etc.

It’s not a matter of economics—it’s one of boring, but essential engineering. And when that has been achieved, the costs will have to be borne by the taxpayers and electricity consumers of Australia. Imagining that reducing CO2 can be achieved while reducing cost of electrical energy is a dream.