Endless headlines forewarn of imminent blackouts across the country. This is now a regular, and unfortunate, feature of coverage surrounding the reliability of the electricity sector.
On Tuesday, the operator of the National Electricity Market issued an update to its assessment of system reliability, known as the “electricity statement of opportunities”. This update does indeed show a significant deterioration in the reliability outlook. However, a deterioration in reliability outlook is not the same as saying blackouts are imminent or unavoidable. This news is certainly no reason to slow down the transition under way in the electricity sector. If anything, the findings of the report suggest – and indeed urge – that we need to speed up our transition to renewables.
Reliability outlook
Reliability is a term thrown around in debates about energy but it is not necessarily well understood. Put simply, it is a measure of the ability of the power system to supply customers with the power they need. A reliable power system supplies power to customers when they need it.
Every year, the market operator prepares an assessment of the reliability of the power system over the next decade. It does this by assessing the ability of the power system to supply projected demand. This is based on a conservative appraisal of what projects will be delivered and online in this period, whether they be storage, generation or transmission. The assessment then highlights where there is expected to be “unserved energy” in the future – that is, energy demand that isn’t met, which is popularly reported as blackouts. This assessment helps inform a response, to guide investments and other interventions to ensure demand is actually met, preventing any blackouts.
This is to a large degree the point of this report. That is, the aim of the assessment is to identify when and where there might be insufficient supply to meet the expected demand, in order to prevent them from occurring. The projections of “blackouts” assume no action is taken, which belies the point of the report. There are also additional tools and levers available to the market operator to help meet demand, including contracting interim reserves, and other emergency mechanisms that further reduce the likelihood of actual blackouts.
Updated assessment
On occasion, when there is a material change in circumstances (for example, the announced retirement of a major power plant), the market operator updates its assessment. This latest report is such an update, triggered among other things by delays to the delivery of a transmission link between NSW and South Australia.
It is fair to say that things aren’t looking great in the short- to medium-term, particularly for NSW, with the projected supply shortfalls considerably increased from the last assessment. This is partly driven by changes to demand projections, delays to battery projects and transmission projects, and in the context of the supposed retirement of Eraring coal-fired power station in late 2025.
These issues, and the failure to coordinate new transmission, coal closure and new renewable energy supply and storage, have been a long time in the making. Years of inadequate (or nonexistent) climate and energy policy have contributed to the situation we now find ourselves in.
Where to from here
Fortunately there is a whole basket of options, projects and responses that could be progressed that would dramatically improve the outlook. These are explicitly canvassed in the update report itself.
Suggestions specifically include accelerating demand-side options. That is, improving things on the customer side of the electricity meter, such as rooftop solar, home batteries or energy efficiency upgrades. The demand side has long been forgotten in reliability assessments, and energy system planning more broadly. The recent report’s analysis highlights that aggregating consumer energy resources and the growth of demand-side participation could reduce the needs for supply oriented solutions.
Outside the demand side, the report also highlights that many regions will benefit from additional projects which will be underwritten by the commonwealth’s Capacity Investment Scheme. Progressing transmission projects as planned and scheduled will also reduce reliability risks. To directly quote the report: “Federal and state government programs, actionable transmission developments, orchestrated consumer investments and demand flexibility have the potential to address the majority of forecast reliability risks”
The longer term
More than a decade of inadequate renewable energy policy failing to coordinate the transition and decarbonisation of the electricity sector has contributed to the predicament the electricity sector finds itself in. While the outlook for the reliability of the system looks grim, there are options at our disposal, as well as emergency measures to prevent blackouts in the near term. For long-term reliability we urgently need to pull our socks up and progress transition options. Headlines emphasising blackouts are neither helpful nor the full picture and risk bolstering potentially costly and unnecessary projects and policy decisions.
Dylan McConnell is an energy systems researcher at the School of Photovoltaic and Renewable Energy Engineering, UNSW
