Meeting the challenges of the new energy world - Matt Zema, Managing Director and Chief Executive Officer of the Australian Energy Market Operator.
There’s been a lot of discussion on the rapid transformation of the energy industry, and quite rightly so. And with no slowing down in sight as governments aim to reduce their carbon emissions, this evolution is raising the complexities of power systems and grids to new levels around the world.
The speed in which the industry is rapidly evolving with renewables, emerging technology, battery storage and active consumer behaviour requires innovative solutions from independent system operators, market participants, policy makers, governments and consumers and communities alike.
For the Australian Energy Market Operator (AEMO), the independent energy market and system operator, the challenges are complex, technical and wide-ranging.
As a nation, our current power grid and market has performed quite well in keeping up with innovation and changes in technology so far. From a reliability point of view we have a high reliability standard of 99.998% - or .002% of unserved energy – that is world leading. We have clear pricing signals. We have open access. We have customer choice.
However, as we move forward, we face some unique challenges. And we are not alone. In fact, in every country and certainly most states, territories and jurisdictions within each country, there are unique operational and network challenges. These challenges are geopolitical as much as they are technical.
One of our challenges, is how the market will respond in light of the ever-changing generation mix, and to what impact this may potentially have on power system security, with South Australia and Tasmania at the forefront of this change.
In AEMO’s joint report with South Australian transmission network service provider ElectraNet, investigating the stability of South Australia’s evolving power system, the analysis concludes that given the high percentage of renewable energy generation in South Australia, power system security and reliability has a greater reliance on the transmission network connecting South Australia to Victoria.
The report also finds given the high installation of wind and rooftop solar PV, the services that have ordinarily been provided by traditional forms of synchronous generators in the past, are still required to assist in the real-time balancing of supply and demand for power system security.
While the report is designed to look at the extremes of the power system, system security is a complex, serious and necessary challenge. It’s about balancing voltage, frequency and inertia across the power system for its synchronous operation within technical boundaries. Maintaining system security in the new world requires a thoughtful, open and informed discussion.
If we look back five years ago, both the gas and electricity sectors were considered more predictable. In the National Electricity Market (NEM) we had a clearer picture of generation in the grid. We could identify and measure a change in load and determine if the market needed to dispatch more or less in order to maintain system security.
Today, and in the future, ‘behind the meter’ technologies such as rooftop solar PV, battery storage, and energy management systems are changing the dynamic performance of the power system and making it increasingly more challenging for independent system and market operators to balance the security and reliability of energy supplied against the changing needs and preferences of consumers.
The need for greater transparency of data and information will also drive the dynamic and continuing change we anticipate in these markets.
Above all, the key is to try and make the integration of renewables and new technologies work for us all – while not compromising the integrity of power system security and reliability. It should be seen as an opportunity not a disruption.
Adapting to the effective integration of renewable energy sources is a key focus for the GO15 – a group of the world’s largest power grid operators, representing more than 70 per cent of the world’s electricity demand.
AEMO has been working on issues related to security and reliability of the NEM for a number of years, in addition to being actively involved in the GO15 in identifying how the generation mix of the markets and new products will contribute to the future energy world.
Our system and network has changed a lot in the last five years and we are preparing ourselves for even greater change in the next five. From a market and system operator point of view we continue to provide planning and analysis that allows for informed decisions to be made and the market to respond and adapt appropriately.
The reliable integration of new technologies into the existing power system requires some innovative thinking and in a new world with increasingly active consumer behaviour, this next phase of where our markets will be going, won’t just be driven by customer involvement, they will be dictated by them.
Matt Zema is the Managing Director and Chief Executive Officer of the Australian Energy Market Operator and the Vice President of GO15. AEMO is responsible for operating the National Electricity Market and interconnected power system in Australia’s eastern and south-eastern seaboard, and the Wholesale Electricity Market and power system in Western Australia.