An Overview of System Strength Challenges in Australia’s National Electricity Market Grid

The national electricity market (NEM) of Australia is reforming via the rapid uptake of variable renewable energy (VRE) integration concurrent with the retirement of conventional synchronous generation. System strength has emerged as a prominent challenge and constraint to power system stability and ongoing grid connection of VRE such as solar and wind. In order to facilitate decarbonization pathways, Australia is the first country to evolve system strength and inertia frameworks and assessment methods to accommodate energy transition barriers, and other parts of the world are now beginning to follow the same approach. With the evolvement of the system strength framework as a new trending strategy to break the transition barriers raised by renewable energy project development and grid connection studies, this paper provides a high-level overview of system strength, covering such fundamental principles as its definition, attributes, and manifestations, as well as industry commentary, cutting-edge technologies and works currently underway for the delivery of a secure and reliable electricity system with the rapid integration of inverter-based resources (IBRs) in the NEM grid. The intent of this study is to provide a comprehensive reference on the engineering practices of the system strength challenge along with complementary technical, regulatory, and industry perspectives.

Forecasting of Wind and Solar Farm Output in the Australian National Electricity Market: A Review

Accurately forecasting the output of grid connected wind and solar systems is critical to increasing the overall penetration of renewables on the electrical network. This is especially the case in Australia, where there has been a massive increase in solar and wind farms in the last 15 years, as well as in roof top solar, both domestic and commercial. For example, in 2020, 27% of the electricity in Australia was from renewable sources, and in South Australia almost 60% was from wind and solar. In the literature, there has been extensive research reported on solar and wind resource, entailing both point and interval forecasts, but there has been much less focus on the forecasting of output from wind and solar systems. In this review, we canvass both what has been reported and also what gaps remain. In the case of the latter topic, there are numerous aspects that are not well dealt with in the literature. We have added discussion on the value of forecasts, rather than just focusing on forecast skill. Further, we present a section on how to deal with conditionally changing variance, a topic that has little focus in the literature. One other topic may be particularly important in Australia at the moment, but may become more widespread. This is how to deal with the concept of a clear sky output from a solar farm when the field is oversized compared to the inverter capacity, resulting in a plateau for the output.

Grid-Scale Battery Energy Storage Operation in Australian Electricity Spot and Contingency Reserve Markets

Conventional fossil-fuel-based power systems are undergoing rapid transformation via the replacement of coal-fired generation with wind and solar farms. The stochastic and intermittent nature of such renewable sources demands alternative dispatchable technology capable of meeting system stability and reliability needs. Battery energy storage can play a crucial role in enabling the high uptake of wind and solar generation. However, battery life is very sensitive to the way battery energy storage systems (BESS) are operated. In this paper, we propose a framework to analyse battery operation in the Australian National Electricity Market (NEM) electricity spot and contingency reserve markets. We investigate battery operation in different states of Australia under various operating strategies. By considering battery degradation costs within the operating strategy, BESS can generate revenue from the energy market without significantly compromising battery life. Participating in contingency markets, batteries can substantially increase their revenue with almost no impact on battery health. Finally, when battery systems are introduced into highly volatile markets (such as South Australia) more aggressive cycling of batteries leads to accelerated battery aging, which may be justified by increased revenue. The findings also suggest that with falling replacement costs, the operation of battery energy systems can be adjusted, increasing immediate revenues and moving the battery end-of-life conditions closer.

Algorithmic Collusion and Australian Competition Law: Trouble Ahead for the National Electricity Market?

This article explores the interaction between the National Electricity Law and potential algorithmic collusion in the National Electricity Market (‘NEM’). Reviewing the current state of Australian competition law, this article concludes that the law does not prohibit algorithmic collusion in the NEM, even though such collusion has serious ramifications for Australian consumers. Despite recent hesitancy to addressing algorithmic collusion, this article argues we cannot afford to ‘wait and see’ and proposes nuanced solutions that appropriately address algorithmic collusion in the NEM. These solutions include a notification regime, a reduction in bidding transparency, and a novel definition to ‘concerted practice’ that would ensure competition law captures tacit and autonomous algorithmic collusion. More generally, the approach in this article highlights the need for market-specific analysis of algorithmic collusion, particularly as the competitive impact of using algorithmic technology depends on the circumstances in which the algorithm is deployed.

Probabilistic Forecasting of Wind and Solar Farm Output

Accurately forecasting the output of grid connected wind and solar systems is critical to increasing the overall penetration of renewables on the electrical network. This includes not only forecasting the expected level, but also putting error bounds on the forecast. The National Electricity Market (NEM) in Australia operates on a five minute basis. We used statistical forecasting tools to generate forecasts with prediction intervals, trialing them on one wind and one solar farm. In classical time series forecasting, construction of prediction intervals is rudimentary if the error variance is constant—termed homoscedastic. However, if the variance changes—either conditionally as with wind farms, or systematically because of diurnal effects as with solar farms—the task is much more complicated. The tools were trained on segments of historical data and then tested on data not used in the training. Results from the testing set showed good performance using metrics, including Coverage and Interval Score. The methods used can be adapted to various time scales for short term forecasting.

Gas Transition: Renewable Hydrogen’s Future in Eastern Australia’s Energy Networks

The energy transition for a net-zero future will require deep decarbonisation that hydrogen is uniquely positioned to facilitate. This technoeconomic study considers renewable hydrogen production, transmission and storage for energy networks using the National Electricity Market (NEM) region of Eastern Australia as a case study. Plausible growth projections are developed to meet domestic demands for gas out to 2040 based on industry commitments and scalable technology deployment. Analysis using the discounted cash flow technique is performed to determine possible levelised cost figures for key processes out to 2050. Variables include geographic limitations, growth rates and capacity factors to minimise abatement costs compared to business-as-usual natural gas forecasts. The study provides an optimistic outlook considering renewable power-to-X opportunities for blending, replacement and gas-to-power to show viable pathways for the gas transition to green hydrogen. Blending is achievable with modest (3%) green premiums this decade, and substitution for natural gas combustion in the long-term is likely to represent an abatement cost of AUD 18/tCO2-e including transmission and storage.