Solar farm production has fallen by half as renewables cause the brunt of grid congestion

Australian solar farms are suffering from a cut in half of their output due to grid congestion in some cases, with renewables bearing the brunt of the excess capacity – even though it is cheaper and cleaner to produce than coal and gas generation.

A study by a team of researchers at the Australian National University involved in the Battery Storage and Grid Integration Program shows that solar and wind power bears the brunt of managing congestion in Australia’s main grid, with some facilities hit hard.

Nearly a dozen wind and solar farms are affected more than 100 days a year, while two solar farms – Mulong and Manildra in western NSW – have suffered production losses of 53 per cent and 48 per cent respectively in calendar 2022. .

Both solar farms lie on a part of the grid known in the industry as the “loss line”, which stands out as a more challenging part of the grid than Victoria’s so-called “sorry dalton” and is the second biggest source of frustration and revenue losses. (See map below).

See: Black Spot needs to address solar “line losses” and other grid bottlenecks

The ANU findings were included in a report to the Energy Security Council’s controversial transportation access reform, which has led several peak bodies to warn that proposed reforms may stall new developments. The Smart Energy Council has called the proposals a “solar blocker”.

The ANU report highlights problems in the way the network is managed, including the way AEMO implements so-called “passive microphone pricing adjustments” to ease congestion.

The report also indicates a failure to provide enough battery storage incentives to help resolve the issue. In some cases, when the batteries are discharged, the situation becomes even worse.

The worst affected solar and wind farms in 2022.

This chart above highlights the hardest hit solar and wind farms located outside of planned renewable energy areas, suggesting that their problems may not be easily addressed without proper market reform.

The ANU team notes that overall, the level of congestion remains relatively low—only 0.3 percent of utility-scale wind and solar generation.

“We expect this to be lower than many stakeholders expected,” the authors say. But it also notes that the impact is shifting more towards renewables, which now account for 79.4 percent of the total cutbacks, even while the overall size of the cutbacks has remained relatively stable.

The study indicates that more than 10 establishments experience wholesale market revenue losses of more than 10 per cent – with Mulong leading at 38 per cent – while another 16 have more than five per cent revenue losses as a result of congestion restrictions. .

In dollar terms, the biggest losers are existing water pumping stations such as Tumut 3 and Murray, which incur losses of about $23 million and $18 million in calendar 2022.

Solar is the worst affected, with twice as much shrinkage as the nearest wind despite having a smaller installation capacity.

Source: ANU

“We can observe that the majority of solar shrinkage occurs in New South Wales, while the majority of wind shrinkage occurs in South Australia. Notably, the solar shrinkage alone in the NSW market region (418 GWh) is greater than the total shrinkage of any region other,” the report says.

But it also notes that shrunk solar (average price $58.74/MWh) and wind ($46.34/MWh) are on average much cheaper than both shrunk gas ($716.69/MWh). megawatt-hour) and coal ($169.42/MWh). , as well as the average unit price for energy during this period ($140.75/MWh).

This means that the technologies most likely to be curtailed under the current arrangements are those that are least expensive and cleanest. They add: “These findings confirm claims, made during stakeholder consultations, that crowding is causing significant curtailment of cheap renewable energy.”

“A downsizing in this scale indicates significant financial losses for these generators, and contributes to investment uncertainty and risks for future projects,” the report says. “In both rankings, we note that roughly the top 40 are made up of renewable generators, mainly solar and wind.”

The report notes that flexible warehousing and loads have great potential to relieve congestion and reduce wasteful dissipation of cheap renewable energy, but are not being fully utilized under the current market structure.

“Much of the talk about the need for a market to relieve congestion suggests that the current design of the market does not incentivize stocking to relieve congestion, but the above findings seem to indicate that it often does.

“It is clear that many batteries are overwhelmingly trying to mitigate congestion, even in the absence of an apparent incentive. This is likely because low spot rates that incentivize charging can often occur along with congestion as a result of a region-wide oversupply of VRE.

It’s also clear, though, that sometimes there are also bids where each battery has to exacerbate congestion by discharging. (See chart above).

“This represents the scenario alluded to often in the discourse, where the lack of overt motivation allows the batteries to make the congestion worse.”

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