The Australian Energy Market Operator (AEMO) released a report yesterday highlighting that while strong industry collaboration has improved the security of Western Australia’s South-West Integrated System (SWIS) over a two year period from 2019, further work is needed as the power system accelerates.

Western Australia’s Southwest Integrated System is the state’s main electricity network serving more than 1.1 million customers.

Operated by Western Power and owned by the Western Australian government, the SWIS was developed around centralised, large-scale, dispatchable generation and includes 7,800km of transmission lines, 67,300km of overhead distribution lines and 25,000km of underground distribution lines.

In a stronger position due to industry collaboration

AEMO chief executive officer Daniel Westerman said: “Since the release of AEMO’s 2019 report, WA’s major power system is in a stronger position due to in-depth industry collaboration, infrastructure investment, and implementation of the WA Government’s Energy Transformation Strategy.”

“Actions taken by Energy Policy WA, AEMO, Western Power and the broader industry have added significant resilience to the power system, including operating the power system at levels of operational demand below the original indicative 700-megawatt threshold.”

The latest report echoes the same message as 2019 – that drivers of change in the power system condition continue to cause increased generation and load volatility.

Rooftop solar continues to be installed at record rates, displacing traditional generation resources and there are also greater spreads of wholesale market balancing prices that are reaching lower negatives prices more frequently.

Total renewable generation up 70% of total demand

Already, total renewable generation is meeting up to 70% of total energy demand in the SWIS, 56% by rooftop solar in particular time intervals.

And AEMO expects this number to continue its trajectory with installed rooftop solar capacity set to double in the next decade.

Westerman added: “The energy-sector transformation in WA continues to increase variability and dynamic power system operating conditions, requiring collaborative effort to ensure consumers continue to benefit from secure, reliable, affordable and sustainable energy.”

Analysis now indicates that the timeframe in which AEMO may no longer be able to operate the SWIS securely, in all periods, has been deferred to 2024.

Recommendations to address emerging challenges

AEMO has identified several actions to provide greater resilience to extreme events in the short term, as well as recommendations that would enhance the WA Government’s reforms to address emerging challenges.

Among the 13 recommendations include the following:

  • Mandate ongoing compliance to the new standards, which comes into effect from December 2021 for all new and upgraded Distributed Photovoltaic installations;
  • Explore whether an alternative means to inject energy quickly is required in the short term before new wholesale energy market arranges are introduced;
  • Determine whether enabling the option of offering each of the component parts of a hybrid facility into the market will provided improved services;
  • Amend the Wholesale Energy Market Rules to create incentives for renewable generators to achieve their dispatch forecast; and
  • Build on the utility of the inaugural Whole of System Plan (WoSP).

Westerman said additional operational tools, new standards, system services, and regulatory arrangements will be needed to address priority actions that will provide increased resiliency to the power system beyond 2024.

He said: “Important reforms such as Stage 1 and 2 of the WA Government’s Energy Transformation Strategy will help to manage these risks, delivering essential system services.

“Our focus, alongside our industry partners, is on the role of consumers and new technologies and their interactions with the power system and the market, as we work with policy makers and the energy industry to ensure the power system continues to operate securely and cost-effectively for all West Australians.”

Carbon Capture and Storage: Is it essential to the energy transition?

Carbon Capture and Storage, or CCS, is a bit of a black sheep in the transition to a net zero economy.

It is one of the favoured technologies of our Federal Government, who expanded the Australian Renewable Energy Agency’s remit to approve funding for CCS projects.

But it is furiously contested by renewables advocates, who view CCS is a sort of Trojan Horse to keep fossil fuel companies in business longer than their use by date, pointing to the disastrous ramp-up of the CCS project at Chevron’s Gorgon Gas development and the struggle to prove its commercial and environmental value at scale.

Some analysts warn however, that simply decarbonising the grid and shifting to renewables will not be enough to reach Paris Agreement targets.

Wood Mackenzie, which released a new report today looking at cost reductions for CCS, says it will grow from a 60Mtpa market today to 400Mtpa by 2030, but will need to rise in penetration by 10-15 times to meet accelerated energy transition targets.

“Industry must cut the equivalent of around 1.8 billion tonnes of carbon dioxide (BtCO2e) each year over the next three decades. Reducing fossil fuels in favour of renewables just won’t be enough,” WoodMac principal analyst Energy Transition Technology Costs Mharaidh Evans said.

“For now, CCS still comes at a significant cost. Our modelling shows the average cost of CCS is higher than today’s carbon pricing levels – and will be for some time to come.”

“However, the number of CCS projects is increasing, with North America the most active. As the industry scales up and technology improves, we forecast cost reductions of around 20% by 2050.”

Evans says projects based in CCS will be better placed to make cost reductions against standalone CCS projects, with breakeven costs 20-25% lower before technological advances are taken into account.