Will Australia's Changing Grid Include the Death Spiral?
Location: New York
Date: 2014-07-18
By now most will be aware of the dreaded utility “declining
demand death spiral”: As solar PV grows, utilities' demand drops.
Utilities respond by raising prices and/or network charges—either
for solar or non-solar customers—further incentivizing solar (and
battery storage), thus further reducing demand.
Few places are more likely to experience the death spiral than
Australia—a vast, sun-drenched nation with huge distances between
urban and rural populations.
The highly-populated East Coast National Energy Network—connecting
Queensland, New South Wales, ACT (Australian Capital Territory),
Victoria, South Australia and Tasmania—currently has 3 GW of solar
PV out of 35 GW peak demand. Yet, this relatively small proportion
is having a material impact on utilities.
Queensland regulated utility Ergon Electricity, which operates
160,000 km of power lines in a territory of 1.7 million square
kilometres with only 700,000 customers, is shedding hundreds of jobs
in an effort to stay competitive with solar suppliers who do not
have a distribution grid to support. Utilities are fighting
back with an increasing rejection of rooftop applications due to
network constraints, but the rising tide of solar will only get
harder to stem as solar costs fall.
Distribution network service providers (NSPs) are keen to introduce
a residential capacity charge for solar power, effectively a tax on
the sun, to mitigate the death spiral. But this, of course, may also
have the opposite effect. In Australian states where rooftop solar
PV power generation in winter is adequate (such as Victoria, South
Australia and Tasmania), consumers may begin to desert the grid.
It is with this in mind that CSIRO (Commonwealth Scientific and
Industrial Research Organisation) is studying the likely impact of a
potential death spiral. CSIRO is leading a report by the Future Grid
Forum (FGF) —due to be published by the end of 2013—with input from
input from virtually every Australian generator, transmission and
distribution network operator, plus regulators, consumer groups and
regional/national government.
“By 2030 we fully expect to have more solar power generation during
the daytime than the grid can deal with,” said Dr. John Ward, CSIRO
research leader. “Australian peak demand occurs during the middle of
the day. But if the take-up of solar increases as expected, this
will shift to early evening, and the need for load management during
the early evening becomes considerably more important.
“The nature of the ‘death spiral' is that it leaves those not in a
position to go off-grid in a very bad place. Furthermore, we may
have to run a 100 percent redundancy system with large amounts of
spinning reserve, as well as paying to deal with voltage control
problems at the distribution end.”
The FGF has been discussing in detail how the industry can move to a
more cost-effective solution. “The high penetration of solar power
will require either balancing prices to rise significantly or a
fundamental change in the market and we have been discussing this at
length,” said Ward.
One way could be battery storage. Australia's solar feed-in tariff
is roughly equivalent to the wholesale price, and consumers can
already start thinking about using storage to manage the price
differential between peak (A$0.525/KWh) and off-peak (A$0.137/KWh)
regulated prices.
Ward added, “Power suppliers are certainly thinking about selling
systems rather than merely electrons, but it's murky territory
having a generator or NSP having involvement with equipment on the
customer-side of the meter. It's not quite clear how this will play
out, but the NSPs in particular are looking at this from the
perspective of network upgrade costs. Is there a more cost-effective
solution which involves storage on the customer's site and how they
make that work from a regulatory point of view?”
NSPs have been exploring exactly this in trials. The Smart Grid
Smart City project by Ausgrid, which operates the distribution
network in the Sydney, Central Coast, Hunter Region and Newcastle
areas of New South Wales, deployed both battery storage systems and
fuel cells outside of the usual regulatory environment to answer
questions about social acceptance of the technology.
CSIRO is also working on a number of research projects to better
understand the relationship between solar power, storage and the
grid. The projects are concentrated in remote communities,
where power prices are highest and power quality is lowest. One such
project, called Plug and Play (PnP), is motivated by improving
understanding of solar generation forecasts in order to reduce
spinning reserve, i.e. diesel generators, or replace it with energy
storage.
CSIRO is undertaking the A$2.9m ($2.8m) project with ABB Australia
and the U.S. National Renewable Energy Laboratory (NREL). The first
phase of the project will involve the development of the technology;
the second phase will see pilot systems set up in both the United
States and Australia.
Users will be able to “plug” in the generation sources and the
system will “play,” i.e. work out which source to use based on
programmable parameters, such as maximising power availability,
minimising diesel usage or lowering maintenance costs. In essence,
PnP will make the decision when to schedule the diesel generator,
when to use solar energy and when to charge the batteries.
Dr. Ward says forecasting is crucial to the process. “The better we
can improve load and generation forecasts the better we can improve
the energy management system, i.e. the batteries,” he said.
Ward adds PnP will be a useful tool for microgrid project developers
who want an out-of-the-box solution rather than custom-made hardware
and software for each installation.
“As the electricity grid evolves to have more interplay between
consumer demand and resource availability, there'll be a role for
PnP-type systems to become mainstream in every part of the
electricity grid,” he noted.
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