Energy change is underway

27th April 2017 · Paul Hyslop

For those of you who don’t remember, 28 September 2016 was the day that several tornados swept through South Australia and knocked down a number of transmission towers at different locations across the electricity network.

These winds and the ensuing damage resulted in the loss of three transmission lines and consequently around 450 MW of South Australian wind generation was tripped from the system over a few seconds. With too much customer demand and not enough generation, the power system frequency fell rapidly and the transmission connection between South Australia and Victoria (interconnector) rapidly overloaded as Victorian and other east coast generators attempted to meet the South Australian shortfall. In response to the rapid overloading of the interconnector a special protection scheme automatically shut it down (tripped). This protection scheme acted as designed to protect the interconnector and the rest of the power system by isolating the problems to South Australia.

The tripping of the interconnector increased the supply deficit in South Australia – about 900 MW – and the simultaneous fall in frequency in South Australia happened too quickly for other protection systems to counter it in order to maintain power in the South Australian region. At that point the South Australian power system shutdown and South Australia was blacked out in its entirety. About 850,000 customers were without power for at least 2.5 hours, and it took about 7.5 hours to restore 80-90% of the load.

The storm and tornadoes created the conditions for the blackout to occur. But it was the failure of a number of wind generators to remain connected through a series of power system disturbances, resulting in the sustained loss of around 450 MW of wind generation, which caused the blackout.[1] The loss of these wind farms was not related to the inherent technology but rather to systems in the wind farm that are designed to protect it from damage. These systems are referred to as protection systems and they were configured to disconnect the wind farms once a pre-set number of power system disturbances had been detected. The Australian Energy Market Operator’s (AEMO) subsequent investigations found that these settings were arbitrarily low on most of the wind farms that disconnected. It also found that, had these wind farms been given a higher setting, they would likely have remained connected to the system through the disturbances and the blackout would most likely not have occurred. Notably these settings have been subsequently revised upwards substantially reducing the risk of these wind farms disconnecting under similar power system conditions in the future.

South Australia’s changing generation mix

The South Australian system has changed dramatically in the last few years, with its generation mix dominated by about 2,200 MW renewables, both wind and residential (behind-the-meter) solar. Traditional base-load synchronous generators have lost a large share of customer demand to renewable generators, and all the traditionally base-load coal-fired plant has now closed. The effect of these changes on how the power system is operated is magnified by the fact that SA lies at one end of the NEM and is a much smaller region, energy-wise, than others. The demand scheduled in the market is now highly variable and therefore so are prices. Demand can flex from 1,000 MW on one day to over 3,400 MW a few days later if hot weather arrives. Spot prices can swing from less than $50 per MWh to $14,000 per MWh in response to these demand variations.

Generators that are synchronised to the power system frequency and that are able to be dispatched to operate at a set output also usually provide system inertia. AEMO also typically use these controllable synchronous generators to manage power system frequency – a consistent and necessary ‘heartbeat’ of the power system. With rising fuel (gas) and maintenance costs and the increasing penetration of renewables, some of these synchronous gas-fired generators temporarily withdrew from the South Australian market and the critical role of frequency control is becoming much more difficult to manage. 

South Australia is connected to only one other NEM region – Victoria – but both these regions experience similar weather conditions. They tend to compete for peak demand supplies. Victoria is also working towards strong renewable energy targets for 2020 (25 per cent) and 2025 (40 per cent), which could see up to an additional 5,500 MW of plant installed by 2025. This would likely increase Victoria’s reliance on its own synchronous generation to maintain frequency and power system security. This is clearly compounded by the recent closure of the 1,640 MW Hazelwood power station.

Can history repeat? 

The industry has not been complacent in the aftermath of the South Australian blackout. If anything - there has been so much change and proposed reform that it is challenging to keep up.

In relation to the power system, AEMO has introduced power flow limits between Victoria and South Australia for times when there are low levels of synchronous generation or during planned network outages, to minimise the impact of system separation if it occurs. It also has operational requirements in place to ensure that at least two synchronous generating units are on in South Australia at all times.

AEMO is also reviewing frequency performance of the integrated system and checking emergency control schemes designed to manage large deviations, and the conditions under which planned network outages are allowed, plus its day ahead and week ahead demand forecasting systems, especially as severe weather events (or possible ‘protected events’) are foreseen.

AEMO and most wind farms have reviewed and changed their protection settings to better ride-through multiple faults such as lightning strikes on transmission lines, and the Essential Services Commission of South Australia is developing more onerous requirements for new parties connecting to the power system.

Origin Energy has contracted with Engie, the owners of the Pelican Point power station, for the second half of the power station to recommence operating which adds more than 200 MW of capacity to the power system.

The actions above have provided several additional layers of protection for South Australia when there is a risk of separation from the NEM, effectively minimising the likelihood of another blackout in South Australia, but increasing costs to customers. 

In relation to the electricity market, the Council of Australian Governments (COAG) has commissioned the Finkel Review, a wholesale review of market structure and frameworks, due to be released any time now. Separately, the Australian Energy Market Commission (AEMC) is progressing a comprehensive System Security Market Frameworks Review. Prompted by the South Australian Government, it is also considering additional market reforms, such as inertia markets and fast frequency control, and reviewing current power system safety net schemes. 

Meanwhile the South Australian Government has committed to spend about $550m on wide ranging initiatives to improve reliability, put downward pressure on prices and create local jobs, including constructing a new reserve peaking gas fired generator, and imposing a system security framework which will require a minimum proportion of customer demand must be supplied by controllable synchronous generators.

And what about Victoria?

Victoria is working to realise strong renewables targets, as mentioned earlier. This likely strong additional penetration of renewables may result in further withdrawal of synchronous generation, as recently seen with the closure of Hazelwood. 

But, physically, Victoria differs from South Australia, in that it has:

  • connections to three separate NEM regions - South Australia, Tasmania and New South Wales - with different weather characteristics and generation mixes, providing a diversity of supply patterns and sources
  • a 500 kV transmission backbone that extends from one side of the region to the other, providing strong system support
  • a diverse generation mix covering coal, gas, wind, roof-top solar, and hydro.

Victoria is also likely to benefit from the learnings we have gained from the South Australian blackout. 

By the time 2020 arrives, market participants will have had time to respond to the currently high wholesale electricity prices, as well as those forecast, with innovative options to supply electricity, secure customers and capture revenue. Flexibility and speed of response on both the supply and demand side will be essential and participants are expected to invest for this purpose.  Gas-fired and pumped hydro electricity generators, battery storage, virtual power stations (or aggregated distributed generation) and aggregated demand response are only some of the options being proposed by market participants.   

The AEMC, AEMO, COAG and market participants also have time to consider the merits of and possibly implement some of the variety of complementary markets and power system standards, operational arrangements, power supplies, and network support systems available to support the high penetration of renewable generation.

Something to remember

Through all of the discussion, proposals, planning and debate, one thing remains clear. We must not forget that the market was originally set up to serve the long term interests of customers. At its inception, the emphasis was on providing customers with a cost-effective, high quality, safe, reliable and secure supply of electricity. 

Competition and customer choice have been at the heart of the reforms. Customers want:

  • transparent information about what they consume, when they consume and how much it costs them
  • the ability to compare their own choices against other choices available, and to weigh up the best option that most suits their lifestyle – in terms of flexibility, reliability, sustainability and cost
  • the ability to leverage the choice of technologies available in implementing an energy supply and management system that caters to their business or lifestyle needs. 

Whilst the interaction of the power system and the market is deeply complex and changing, any modification or change to the design framework must live up to the National Electricity Objective, and consider the long term interests of the customer and their willingness to pay for a more reliable, and more sustainable, power supply through electricity services.


[1]   See AEMO (March 2017), Black System South Australia 28 September 2016, p.32.