AEMO: Australia at heightened risk of power shortfall

Australia has a heightened risk of involuntary load shedding within the next 10 years as a result of reduced reserves, according to the latest modelling by the Australian Energy Market Operator (AEMO).

AEMO’s 2017 Electricity Statement of Opportunities (ESOO) released today confirms the need for additional investments and new approaches to ensure AEMO has a reliable portfolio of dispatchable energy resources capable of responding quickly and effectively to the dynamic needs of the power system.

The modeling has shown reserves have reduced to the extent that there is a heightened risk of significant unserved energy (USE) over the next 10 years, compared with recent levels.

USE is the amount of energy that cannot be supplied to consumers, resulting in involuntary load shedding, because there is not enough generation capacity, demand side participation, or network capability to meet demand.

The highest forecast USE risk in the 10-year outlook is in 2017-18 in South Australia and Victoria, however, this risk is being addressed by the SA Government’s energy plan which includes the development of additional diesel generation and battery storage.

AEMO chief executive officer Audrey Zibelman said targeted actions, such as the pursuit of 1000MW of strategic reserves across Victoria and South Australia, are necessary to provide additional firming capability to reduce risks of supply interruptions.

“As the independent market and system operator, AEMO’s primary role is to maintain system balance,” Ms Zibelman said.

“It is the physics of the power system that define the requirements for balance and it’s our role to ensure that the resource is able to meet the demands of the system at a time and at a location where it is necessary.

“The power system does not have the reserves it once had, and therefore to balance peak summer demand in real time, targeted actions to provide additional firming capability are necessary to reduce heightened risks to supply.”

Firming capability can be dispatched to maintain balance on the power grid, and can include generation on the grid, storage, demand resources behind the meter, flexible demand, or flexible network capability.

The analysis shows New South Wales and Victoria could see a heightened risk of USE when the Liddell Power Station closes in 2022.

According to AEMO, renewable generation can provide some support to maintain reliability even without firming capability.

However, if this renewable development was to lead to earlier retirement of existing thermal generation, the risk of USE would increase without additional firming capability.

In Queensland and Tasmania, no material USE risk is expected in these regions across the 10-year assessment period for the modelled scenarios.

Ms Zibelman said the challenges and transformation are similar to those faced by other countries around the world.

“In the European, Asian and United States markets, it is increasingly recognised that changes in market design to retain and incentivise appropriate levels of investment in system security and reliability are required,” she said.