Australia’s power system is entering a “new paradigm” to take advantage of the most affordable energy for consumers today: variable renewable energy.
The shift moves the sunny, windy country away from the belief that only baseload power and peaking plants can ensure reliable electricity, Daniel Westerman, CEO of the Australian Energy Market Operator (AEMO) told RenewEconomy’s weekly Energy Insiders podcast.
“We’ve sort of gone from an old historic construct of baseload and peaking to today’s world, and frankly, the future world of variable renewable energy and firming,” Westerman said. “And that’s kind of the new paradigm that we find ourselves in, in the power system.”
Westerman said the rapid scale-up of Australia’s renewable energy capacity—and in particular, its recent achievements of supplying nearly all of its electricity from renewable sources—is charting a new path forward.
Australia’s grid is structured around maintaining a baseload power supply, where grid reliability hinges on maintaining a minimum level of available power. This approach is centered on supplying customers with the lowest-cost electricity, which historically has been produced from coal.
Coal was “always on” and it provided the baseload of the power system because it was the cheapest, Westerman said. “And it was supplemented by peaking capacity… and that peaking was often gas, because it was the next most expensive.”
If demand grew past the cheapest plant’s capacity, AEMO would then dispatch the next cheapest alternative, and so on, with increasingly expensive energy sources.
Podcast host David Leitch said while people often consider reliable electricity supply to be dependent on baseload, many CEOs of big utilities—who are the coal fired generators—“see that the era of baseload has passed, and that’s largely because of the growth of rooftop solar.”
Westerman agreed the baseload strategy is outdated, now that wind and solar are the least-cost sources, being “free when the sun shines and the wind blows.”
“But it’s not there all the time,” he said.
“So what you do want is a power system that maximizes the output of the lowest-cost form of energy for consumers, that’s variable renewable energy, and then to fill in the gaps of that variable renewable energy with firming and ultimately backup power.”
When he says firming, Westerman is referring to a process of supplementing renewable energy with another energy source, like a gas turbine, to fill supply gaps.
“One of AEMO’s main priorities is to develop an engineering roadmap that will allow the grid to operate at 100% renewables at times, and Westerman is confident that can happen sometime soon,” RenewEconomy writes.
But while pursuing renewables and storage as the way forward, AEMO finds itself “in the middle of a debate,” RenewEconomy says. On the other side, are those who argue that Australia’s ageing coal-fired generators should be extended to maintain baseload power—and then be replaced with “always on” nuclear power plants.
