ESB highlights renewables growth, cautions on security

Written by Energy Action

In its yearly report card on the state of the National Electricity Market (NEM), the Energy Security Board (ESB) outlined an improved performance. The report, prepared for the Council of Australian Governments’ (COAG), highlighted growth in renewables generation and slight improvements in affordability.

According to the ESB, the two are interlinked. And while electricity prices have improved slightly at the retail level, the ESB notes ongoing declines in wholesale energy prices which are expected to continue.

In its announcement, the ESB outlines the “remarkable growth” in variable renewables generation as the transition continues apace. The report references estimates from the Australian Energy Market Operator (AEMO) that electricity generated by wind and solar across the NEM rose to 16%, up 14% the previous year. That doesn’t include rooftop solar, which would push the figure above 20%.

The report goes on to forecast a steep increase in renewables to 27% by 2022 and reaching more than 40% by the end of the decade, foreshadowing that “uniquely Australian” rooftop solar will supply 10% of the NEM by this time.

The report also breaks down renewables generation by state. Tasmania is leading the pack, with the use of hydro and wind is able to operate at close to 100% renewable generation followed by, South Australia at 53% variable renewables. In New South Wales, Victoria, and Queensland the figure is between 10 and 20% variable renewables output, but increasing rapidly.

Despite this pushing down prices for energy users, the ESB cautioned against ongoing energy security issues namely ensuring “appropriate levels of frequency, voltage, inertia and system strength.” In support of this concern, the ESB noted that AEMO interventions (such as demand response measures) had doubled from last year.

While the ESB also highlights that while reliability has improved, supply continues to be constrained during peak summer demand periods in New South Wales, South Australia and Victoria. This is due to the combination of severe weather events and ageing coal-fired generators.

What does this mean?

Generally speaking, the growth in renewables generation (and rooftop PV) is helping put downward pressure on wholesale prices which is benefiting commercial and industrial electricity users.

Security also remains “the issue of most concern to the ESB”. And while supply conditions are improving, the ESB notes that new renewable generators are experiencing network constraints and distribution networks continue to come under pressure with the “rapid uptake of rooftop solar PV.”