15/06/2017 - 06:55

Rooftop solar changing energy market

15/06/2017 - 06:55


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Rooftop solar panels cut peak electricity demand last summer by 7 per cent and their growing popularity is reshaping consumption patterns, potentially at higher cost to electricity generators, a new report has found.

Rooftop solar panels cut peak electricity demand last summer by 7 per cent and their growing popularity is reshaping consumption patterns, potentially at higher cost to electricity generators, a new report has found.

The Australian Energy Market Operator has found that energy demand in the South West Integrated System (SWIS) peaked last summer at 3,670 megawatts on March 1 2017, the lowest level since 2009.

While the biggest factor was the mild summer temperatures, rooftop solar also played a part, reducing demand by an estimated 265 MW or 7.2 per cent.

The AEMO estimates one in four households in the SWIS have a solar photovoltaic (PV) system, with a total capacity of 650 MW.

The installed capacity grew by 130 MW last year and is expected to keep on growing by around that amount each year.

AEMO’s executive general manager Western Australia Cameron Parrotte said this was accelerating a paradigm shift for the energy industry.

“The rapid adoption of rooftop solar is not only slowing annual operational consumption growth but also eroding the mid-day grid demand and shifting peak demand to later in the day,” he said.

“With the strong growth in rooftop solar installations anticipated, AEMO expects demand in the middle of the day to shrink further, resulting in a rapid increase in demand in the lead up to the evening peak once the sun sets.”

The AEMO illustrated this by showing the differential between the intra-day low-point in electricity demand, around 1pm, and the high point around 6pm.

On July 13 this year, the differential was about 1,100 MW, nearly double the differential in 2008.

This load profile, known in the industry as the ‘duck curve’, will require generation to start and shut down more often in a very short space of time to meet the variable demand.

“The ‘duck curve’ is a factor that may contribute to a shifting market paradigm where thermal generators are facing higher operational costs alongside reduced demand,” Mr Parrotte said.

“Market and system reforms will need to be put in place to maintain system security and enable this transition at the lowest cost to consumers.”

The AEMO report said another factor that cut peak demand last summer was increased use of the Individual Reserve Capacity Requirement (IRCR), which is used by large customers.

A total of 53 customers, who are incentivised by the ICRC scheme to reduce load during high demand periods, reduced load by 124 MW on March 1 2017.

AEMOs analysis was included in its 2017 Electricity Statement of Opportunities (ESOO) for the wholesale electricity market.

The report determined the reserve capacity target for 2018-19 to be 4,620 MW – this is the amount of capacity needed to meet forecast peak demand, including a buffer.

It also estimated peak demand will grow by 1.6 per cent per year over the coming decade.

On this basis, currently installed capacity in the SWIS will be sufficient to meet demand out to the 2020-21 capacity year.

That is after taking out 454 MW of so-called demand side management and 387 MW of generating capacity currently operated by Synergy, in line with policy announcement from the former state government.

The AEMO estimates 5 MW of extra capacity will be needed by 2021-22, increasing to 433 MW by 2026-27.

It noted that the current review of the wholesale electricity market could change these numbers.

In particular, it is not sure if 106 MW of demand side management capacity will return to the market once the proposed ‘reserve capacity’ auction commences.

Mr Parrotte said AEMO supported the ongoing review of the wholesale electricity market, and would work closely with policy makers and regulators to ensure future reforms address the new market reality.

“While the current WEM is functioning, we need to plan ahead holistically in anticipation of a low carbon future with increased intermittent generation from renewable sources,” he said.

AEMO’s base case forecasts assume there is no new generation capacity installed in the SWIS, as there is no certainty about whether proposed projects will proceed.

However, it did note that five renewable energy projects with a total nameplate capacity of 323 MW have been proposed for the 2019-20 capacity year.


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