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Where will renewable generation projects fit in Australia’s future electricity grid?

Australia’s electricity grid consists of more than 850 000 km of distribution grid and 45 000 km of transmission grid in operation across the country one of the longest interconnected electricity markets in the world.

Electricity is an essential service and, unsurprisingly, the value Australia places on electricity is high.

The National Electricity Market is a lifeline for our vast east coast, with its vital supply of power for homes, businesses, emergency services and commercial operations. It is a complex network and getting grid connection right for small or large operations is faced with daily issues that need to be reviewed and dealt with, or necessary efficiency improvements identified. How well placed is our electricity grid to support the future? A future with more renewable generation connections, consumer demand for ‘green’ energy, and changes in the way we use electricity.

Currently in Australia, the lack of transparency and consistency in the grid connection process is negatively impacting renewable power project outcomes. This is the key takeaway from Aurecon’s grid connection report developed for Australia’s clean energy peak body, the Clean Energy Council, earlier this year.

This co-authored report highlights that there is currently more than 50 GW of proposed renewable generation projects looking to connect across the National Electricity Market and the number of grid connection applications each year is likely to keep increasing exponentially. So, what is the main issue for the electricity grid queue? It’s that our aged transmission lines are limited in their ability to accept electricity supply from regions where renewable generation projects are being built. 

Back to the future in grid connection

Back to the future grid connection

When the electricity grid was first developed in Australia, the high-capacity transmission lines were designed to service large-scale centralised electricity generation from fossil fuels. What we’re seeing today is wind and solar projects being built where there is an abundance of natural resources, and they aren’t the same areas as traditional fossil fuel supply.

The existing transmission lines in these ‘new’ regions were never designed to transport bulk electricity from large-scale renewables projects. This has resulted in a complex process for any new generation that seeks to connect to the network, particularly in areas where the grid has low system strength.

What could our future energy be like if we acted now and changed this state of affairs?

Simple yet so complex

Just imagine what the future could be like for Australia if we take specific actions today with our electricity grid, and how that could change the future of power generation. We have the possibility of 100 per cent renewable energy supply, storing power, and even exporting clean energy overseas. The ABC News reported that on 7 November 2019, for the first time ever in Australia, renewable energy supplied more than 50 per cent of Australia's national electricity market. This is exciting news, but there are plenty of hurdles to overcome if we want to increase that percentage.

In a way, the process of connecting to the grid is very structured and rigorous with clearly defined steps.

However, when you start to model the connections for a proponent at different geographic locations, particularly when there’s already a large amount of generation trying to connect to that point, it becomes very complicated as to how the models are assessed and approved.

In theory, the Australian Energy Market Operator 5-step process to connecting into the grid is straightforward, but applications become stuck in the system when the transmission capability just isn't enough to accommodate the renewable energy that’s generated, and there’s no guarantee of how much supply can be accepted in the future. Do the rules and guidelines for grid connection need to change?

If rules change, what could that mean?

Every single renewable generation application is unique because of the geographical point at which the project developer is trying to connect into the network. Each connection application requires power system modelling that replicates the as-built scenario and predicts the impact that the new connection will have on the electricity grid. With different levels of system strength and thermal capacity, the boundaries for operation are often complex and unclear.

One recommendation from Aurecon’s report is to provide the market with greater access to network data, improving transparency and allowing developers to better understand their risk profile at the point of connection.

In October 2019, the Australian Energy Market Commission introduced a new rule with the aim of improving publicly available information regarding new grid-scale generation project applications. What does this mean for developers wanting to connect into the grid?

More information will have to be shared about enquiries or applications with the Australian Energy Market Commission for grid connections in different geographic locations. In theory, the market can be more informed around who is trying to connect at which points, and where there might be curtailment or constraints on the network.

Connections are about compliance and, from a developer’s perspective, capex and delivery timing risk. Any Australian Energy Market Commission information rule changes give a new class of participants the ability to commence project feasibility studies with more information than they’ve had in the past.

The energy network is changing whether we like it or not

Aurecon’s report recommendations are intended as a starting point for the industry; to promote dialogue between all participants in the market and encourage debate about how best to tackle the various nuances within the grid connection process.

Why is it important to get this process right? Fundamentally, it is about energy customers. Our industry is designed to provide customers with safe, sustainable, reliable and affordable energy.

We should be seeing incremental growth in the number of renewables projects connecting to the grid as Australia transitions to a low-carbon future and reduces its reliance on fossil fuels.

Grid connection may only be one piece of a large puzzle, but the flow-on effects of this complex process need to be considered. If the process is difficult, time-intensive, and costly, this will ultimately lead to increased costs for developers, and consequently an increase in levelised cost, with the ultimate flow-on effect to higher energy prices.

Timeframe from application to connection

The energy network is changing, and the market is moving towards cheaper renewable energy. But, this is only going to be achievable if developers are enabled to deliver cost-effective projects, with confidence from investors. Streamlining the grid connection process is one of the many opportunities that we have as an industry to support the Australian energy network through this evolution, which is why it is so important to engage, collaborate, and invest time in getting this process right.

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