First of all, a high spot price is not in itself a problem as long as the high price lasts only for a short time and effectively brings needed capacity online. Where you have a serious problem is when spot prices spike, no one responds and load-shedding starts. I appreciate that SA has actually got to the point of load-shedding several times now, which is indicative of a severe problem.
However, saying that renewables are the cause of this is the same as saying that nuclear is the cause of Chernobyl. Nuclear plants don't inherently melt down if they are properly designed and operated and renewables don't inherently cause load-shedding if they are integrated to a properly planned and operated bulk power system.
What is occurring in SA is a power system planning and market design failure that is not inherent to any one technology.
It seems the system operator has been relying on reliability services provided by large synchronous generators without actually pricing and creating a market for those services, which has caused them to disappear with coal retirements and leave the power system in a chronically insecure state. In order for the market to ensure both day-ahead generation adequacy and as well as real-time operating reserve margin for unit contingencies, generators need to be able to get paid for providing those services, at a level that makes it economical to invest in new assets or maintain existing ones.
This is a policy problem, not a technical one.
FWIW I work for the company that owned the now decommissioned Hazelwood coal plant in Victoria, but I'm not involved with that plant at all.
> However, saying that renewables are the cause of this is the same as saying that nuclear is the cause of Chernobyl. Nuclear plants don't inherently melt down if they are properly designed and operated and renewables don't inherently cause load-shedding if they are integrated to a properly planned and operated bulk power system.
Isn't this just juggling semantics? Nuclear is very much a necessary condition for nuclear meltdown. Removing nuclear power is a foolproof option to avoid nuclear meltdown.
Likewise displacing dispatchable generation with renewables enables the conditions where we can get these super high spot prices. To guarantee supply during peak load you need a lot of redundant dispatchable generation sitting around gathering dust until the $14500 day. On that day it needs to pay for itself, hence $14500 per megawatt hour.
EDIT: Oh wait, I'm a dummy who didn't read your post correctly. I agree with your comments about the market needing to correctly price reliability of supply. In WA we have a capacity market for this reason.
There are a lot of economic scenarios for a 'peaker' plant that don't necessarily involve it having to recover its full capital cost in just a few days of operation. Often these are plants that have been retired from the energy market due to high operating costs, but can still start up and run for a few hours well below the $1000/MWh level because the owner has already recovered their cap-ex over many years of operation. They may have other revenue streams that cover their operating costs, like black-start services, and operating reserve is just the cherry on top.
This works well for the current 30 minute market. At 5 minutes there are no non-battery plants, other than hydro, which can start up fast enough to provide power to the market.
True for cold start, but gas plants can ramp in the 5 minute window if they are already running. But the market conditions would have to such that it makes economic sense for them to be in that operating condition.
Right and it takes them five minutes to ramp down, and the price market window will be 5 minutes. Which means they will have to bet on the price being high the next windiw too. Which means higher prices sustained longer because gas units won't be quick enough any more.
If they're ramping as part of a system reliability service, then should be doing it under automatic generation control, not betting on the energy market, and they would have committed a certain amount of up and down regulation some hours in advance. The cost question is whether it makes sense for them to bid for that reliability service to begin with.
Which goes back to my argument that this is to a large extent about market design and not technology.
>First of all, a high spot price is not in itself a problem as long as the high price lasts only for a short time and effectively brings needed capacity online. Where you have a serious problem is when spot prices spike, no one responds and load-shedding starts. I appreciate that SA has actually got to the point of load-shedding several times now, which is indicative of a severe problem.
As you should well know being in the business the spot price has a hard cap of $14500. You should also know that spot prices were maxed out from 3pm to 8pm in Vic and SA on Thursday and would have been maxed out for the whole of Friday if not for AEMO stepping in and effectively nationalizing the electricity market.
Anyone with a spreadsheet and publicly available data can see that the SA shedding events have expanded to Vic for the first time this year. Further anyone who even looks at the ages of the coal plants providing base load generation will realize it will get worse on from here.
For the rest of your points: this is absolutely a technological problem. Physics and maths, contrary to what our old prime minister used to say, are respected in Australia. Electricity generated by heavy spinning things takes a long time to ramp up and down and needs a different grid to that used by renewables and batteries. Batteries are about 5 orders of magnitude too expensive to be used as the backbone of the energy network. So the only things renewables do today from the pov of the network is add spikiness both the production and demand side of the market, making both the market and the grid more unstable, more expensive and worse for everyone who isn't a speculator.
In short: with current technology you can have a stable network or a renewable one, you can have both if you're willing to pay at least 10 times more for electricity.
Or we can build nuclear power plants and solve all our problems for the next 50 years.
I agree that a 100% renewable grid is not economical at this time. Nor is 90%, nor 80%. The question is where the threshold lies for the maximum amount of renewable generation we can accommodate while maintaining reliability and delivering power at an economical price for consumers.
That number is going to vary in different grid systems based on the size of the balancing area, the strength and resiliency of the transmission system and amount of storage available. Balancing areas with large amounts of hydro-storage will be able to accommodate more renewables, as will those that connect 10s of thousands of MW or more.
This isn't about physics and math. It's about SA being a very small grid where contingencies (both transmission and unit trip) dominate reliability planning. There are grids operating with the same level of renewable penetration as SA or more that have never experienced load shedding.
SA could accommodate perhaps one large nuclear power plant. And then the entire system design would be dictated by unit tripping contingencies. The cost of planning the system to prevent load-shedding when a 500+ MW unit trips at that plant would be massive. Nuclear is not a panacea for system security.
Please don't generalize the problems of a very unique and small system to the rest of the world. SA has unique challenges as a vast and sparsely populated region that don't exist in Europe, Asia or even most of North America. ERCOT has run with 40% wind penetration on a 44 GW system, and they've done it cheaper than anyone can build nuclear today.
> It seems the system operator has been relying on reliability services provided by large synchronous generators without actually pricing and creating a market for those services, which has caused them to disappear with coal retirements and leave the power system in a chronically insecure state. In order for the market to ensure both day-ahead generation adequacy and as well as real-time operating reserve margin for unit contingencies, generators need to be able to get paid for providing those services, at a level that makes it economical to invest in new assets or maintain existing ones.
Aren't these frequency response services the same provided by Tesla's battery system at the Hornsdale Power Reserve? If so, those reliability services are paid for by the South Australian government. Additionally, the Hornsdale Power Reserve responds to frequency sags within milliseconds, whereas legacy thermal needs upwards of 15-20 minutes to raise the frequency or voltage back up.
> First, let’s recap on some of the important points. The Tesla big battery was built without subsidy, in a period of just 4.5 months from design to full operations, and at a cost of $91 million. If the figures available to date are any guide, it is making plenty of money ($24 million in revenue this year) and may deliver a payback to its owners of less than four years.
> Even better, it is delivering an even bigger market benefit for consumers ($40-$50 million in its first year) by lowering costs, particularly in the frequency control market, but also in wholesale price. Add in the value of grid security, and the avoidance of blackouts, and the savings are considerable.
> Tesla makes its money through a $4 million a year contract (for 10 years) with the South Australia government, and sets aside 90MW and 10MWh to provide grid security, mostly by intervening when major events happen.
It's more than just frequency response, though. After reading some of the event reports from South Australia, some of them are caused by a simple lack of generation adequacy (demand exceeded capacity for a sustained period due to generation unplanned outages) and others by transmission contingencies (cascading failure caused by a transmission line going out of service). These aren't problems that batteries solve per se but yes, the future definitely has more batteries in it.
> However, saying that renewables are the cause of this is the same as saying that nuclear is the cause of Chernobyl.
Are you suggesting SA renewables suffered an unplanned failure this summer? I havn't heard anything about that and I expect that they have been functioning as expected and that you are mistaken. Do you have a source?
What I'm saying that is the loss of system security events that have occurred in Australia this summer are not inherent to the operation of the grid with high renewable penetration, but rather a failure of the system operator to plan adequately for foreseeable system conditions and contingencies, just like Chernobyl was not an inevitable occurrence linked to the underlying technology. So using the SA load-shedding events to say "renewables can't work at large scale" is similar to citing Chernobyl as a reason not to build new nuclear plants.
However, there was a very well documented failure of LVRT performance on wind turbines during the 2016 SA blackout.
However, saying that renewables are the cause of this is the same as saying that nuclear is the cause of Chernobyl. Nuclear plants don't inherently melt down if they are properly designed and operated and renewables don't inherently cause load-shedding if they are integrated to a properly planned and operated bulk power system.
What is occurring in SA is a power system planning and market design failure that is not inherent to any one technology.
It seems the system operator has been relying on reliability services provided by large synchronous generators without actually pricing and creating a market for those services, which has caused them to disappear with coal retirements and leave the power system in a chronically insecure state. In order for the market to ensure both day-ahead generation adequacy and as well as real-time operating reserve margin for unit contingencies, generators need to be able to get paid for providing those services, at a level that makes it economical to invest in new assets or maintain existing ones.
This is a policy problem, not a technical one.
FWIW I work for the company that owned the now decommissioned Hazelwood coal plant in Victoria, but I'm not involved with that plant at all.