Thread by @TennantReed

At @GrattanInst event “Summer Blackouts: The New Normal?” @Library_Vic , with Guy Dundas (Grattan), two Paul Austins (1x @AEMO_Media , 1x Grattan) & Suzanne Falvi(@the_AEMC ),
Sparked by their report grattan.edu.au/report/keep-ca…

Guy Dundas, Grattan:
200k Victorians lost power on 25 Jan and Alcoa smelter lost power the day before. Is this normal now? What are the implications?

On a heatwave day when demand is high, supply is reduced and all other options have been exhausted - load has to be shed.
Note this has happened in only 5 cases since 2005.
These gen shortfalls are less than 1% of total power outages (mostly network probs)

System is in tight supply following 2017 closure of Hazelwood power plant, new supply still coming.

Grattan reckons generation shortages are not the new normal - as long as governments keep calm and carry on.
should not target zero outages - the cost of perfection is not worth the benefit. See former SA Gov measures to respond to blackouts - $115m+, gen used for 4 hours so far

Without new investment AEMO projects increasing shortfall risk, breaching 0.002% reliability standard from early 2020s.
This looks concerning but is not in fact concerning. outlook only considers firm commitments for generation - very conservative take, to signal need for new inv

Different scenario by AEMO for Integrated System Plan has less limiting assumptions and reliability is ok. If we have following investment (and a stable environment for@it) we can replace retiring assets and stay reliable enough.

Challenges to reliability and responses:
Gas market uncertain, but risks manageable
Variable RE can be matched with flex investment.
Climate policy uncertainty - needs resolution, NEG or similar second best can work.
Govt interventions - may exacerbate underlying uncertainty

Uncertainty point: Snowy 2 is huge; coming 2 years after Liddell closure, it makes a commercial response to Liddell harder in mean time.
Need for backup: RERT and variants can handle.

Next: Paul Austin, AEMO:
Rarity of load shedding events illustrates changing nature of system. NEM was oversupplied for most history. But this has changed. The system has been close to shedding several times in recent years. Risk profile has changed.

Heat events have a. If impact on electricity system risk. The warming trend is continuing and we need to manage risk of higher temps more often. Extreme weather i mpacts generation, but also transmission, bushfires, flooding (wets coal stocks of power stations)

Managing renewables presents challenges - see SA data for 24 Jan. Vic and SA wind resources are somewhat correlated. Rooftop PV pushes peak into evening, peak climbs more steeply (duck curve). We are learning to manage.

Thermal generation is also a concern. Forced outage rates are rising. Brown coal declined through the recent heatwave as Yallourn and Loy Yang units dropped or de-rated.

Conclusion: load shedding is a low-probability high potential consequence tail event. Reliability events involve coincident outages for many users at once. RERT is a form of insurance for this risk. Cost is a consideration!

Steps needed:
Implement Integrated System Plan - augment certain transmission, unlock renewable zones

Review Reliability Standard in light of latest Value of Customer Reliability study. What is tolerance for load shedding given greater device use etc?
Strategic Reserves

Strategic Reserves: REFT is a bit on-again off-again, only usable when 0.002 breach at risk. SR could allow better planning, lead times.

Suzanne Falvi, EGM AEMC:
Most outages caused by poles-and-wires problems. We’ve seen costs of trying to address this (network costs 50% of retail bills now, gold plating unpopular).
Lack of supply is 0.2% of outages (and our focus tonight)

Little unserved energy historically, but system is changing.
Before 2017 AEMO had signed 3 RERT contracts and used none.
Since, RERT has been used 3 times, driven by aging fleet, peaky demand, high temps, variable supply

Need reserves, but need them to work well with market design.
In-Market Reserves driven by contracting and risk/reward of price risks. Price signals supply to enter.

Emergency Reserve is for when market supply falls short.

AEMC believes the current reliability standard remains appropriate, but we may need to change how the system operates.
Recommend RERT changes that give AEMO more flexibility, better information from better modeling.

Emergency reserves are expensive and for real emergencies. Need a well functioning market backed by price signals and policy certainty.

RERT enhancements:
Recover costs of RERT from customers responsible for its need
Longer lead time for procurement to cut costs
Ensure price of Reserves less than cost of load shedding
Encourage market response.
Submissions due by 21 March! aemc.gov.au/rule-changes/e…

Q&A: does the transition to lower emissions and more RE entail greater risk?
Guy Dundas: no. Our problems stem from the sudden shock of a big generator retirement. If we can get a better investment environment, we can manage.

Q: lessons from SA and Hazelwood shocks?
A: Paul AEMO: SA blackout has been heavily reviewed and we’ve learned a lot. Many new initiatives to strengthen system - interventions for system strength show AEMO proactivity.
Hazelwood baseload doesn’t match well with capacity needs

A: Suzanne AEMC:
We are reviewing need for updating framework to, eg, reduxe need for intervention for system security services.
Doubt we can slow the system transition - we need to keep up.
Hazelwood: 3 year notice rule will help avoid surprises

A: Guy: distinction between security and reliability - reliability probs are in extreme heat. Security events might happen at any time (albeit with extreme events - SA blackout was at 20C)

Q from Aust Institute: doesn’t solar reduce reliability problems when most at risk?
A: Paul - yes, PV reduces max demand esp during midday. But peak now comes in early evening, and solar can’t help much then.
A: Guy: remember generation investment reflects rooftop PV

Q: should Govt cancel Snowy 2.0?
A: Guy - prob is lack of transparency. If it stacks up, do it. Pumped hydro definitely has a place - But does 2GW have a place in 2024? lots of risk given rapid transition.

Q: how much does change of government impact AEMC/AEMO work, plans?
A: Suzanne - we are advisers to govts. Work program has been underway for a while and is unlikely to change radically. Accept rule change proposals from anyone. RRO rules are important development

A: Paul: politics complicates work on, eg, NEG.

Q: are AEMO and AEMC at war over reliability and security?
A: Suzanne - no. Collaboration is needed and happening. Of course there are robust discussions about important issues. The three institutions (with AER) need to work together, and are.

Q: how will all this look in five years?
A: Guy: Liddell closure will price manageable with so much notice.
A: Suzanne: we will get through current tight spots
A: Paul: investment and demand response will come through, with better coordination of distributed resources