Too much solar? For whom exactly?


Anarchy – it’s a strong word. When used to describe the conditions surrounding an electricity system, as it was by the Energy Security Board Chair Kerry Schott, it is especially worrying.  I reckon anarchy is something you really can’t afford to have when it comes to the power system. If the power system isn’t kept in control then people can die, lots of expensive equipment could be damaged, the economy could come to a grinding halt and God forbid we might even be unable to watch Netflix and have to talk to our loved ones.

According to media reports Kerry Schott used the word anarchy in describing the rapid uptake that has been occurring with rooftop solar in this country.

She’s not the only one complaining of there being far too much solar energy coming into the system.

Over the last few weeks there have been number of reports in the media that grid is on the verge of hitting too much solar energy.

The Age reported on concerns by electricity retailer-generators where they were predicting Australia, “could become the first country in the world where the grid cannot handle the excess level of distributed electricity generated”.

According to these electricity industry executives we are on the verge of a “solar peak” – a point at which “there is no point in putting any more solar power into the system” because it will just be spilled and wasted.

Worse it might even cause blackouts.

Andrew Dillion, head of the Energy Networks Association told the ABC’s 7.30 report,

“If there is too much energy coming back up the system in the middle of the day it can cause either frequency, voltage disturbances in the system which will lead to transformers and other equipment tripping off to protect themselves from being damaged and that will cause localised blackouts.”

This is all coming within the context of a furious battle over a recommendation by the Australian Competition and Consumer Commission that in 2021 the Federal Government should remove the rebate provided to solar systems under the Small Scale Renewable Energy Scheme.

So are we faced with a serious problem of there being too much solar and does that mean we should scrap the rebate?

This comes down to really two separate issues I’ll examine in this article:

  1. Macro-level: Are we at risk of generating more solar than we have demand for at an overall wholesale market generation level?
  2. Micro-level: Are we at risk of overloading the distribution network down at the local distribution transformer level where the systems are installed on homes and businesses?

Then there’s also an issue about do we care about the dangers to our children and others around the world from global warming, and is this solar rebate a worthwhile expenditure to address these dangers?

Before getting into the detail over whether or not we’re on the verge of too much solar we should quickly cover off on this issue over whether the SRES rebate is worthwhile expenditure in terms of carbon abatement.

It turns out that the recently awarded Nobel Prize for Economics went to a person who could shed light on this topic – Professor William Nordhaus. I happen to think his work involved a range of flaws which meant his economic analysis tended to seriously underestimate or ignore substantial risks associated with global warming, but let’s put that aside for one moment.  According to Nordhaus’s 2017 paper published in the Proceedings of the National Academy of Sciences in 2020 the economic benefit from avoiding a tonne of CO2 being emitted to the atmosphere was about $58.  By comparison the SRES solar rebate would deliver this abatement at a cost of $26 in 2021 – the date it was recommended to be abolished by the ACCC.

For those who point to carbon trading as a potentially more efficient mechanism, yes I agree with you. But firstly, you might like to get such a measure implemented before you scrap existing policy mechanisms that deliver abatement at lower cost than the economic benefits they provide.

Are we at risk of generating more solar than we have demand for at an overall wholesale market generation level?

Well certainly not today. Solar reached its peak level of penetration or market share in December last year. The chart below illustrates the sources of power generation across the National Electricity Market across the whole of December. The troughs are generally about 2am to 4pm, while the peaks tend to be between 12 noon and 4pm (all in NEM time which is eastern standard time without daylight savings). It shows pretty clearly that we were in no danger whatsoever of solar generating more electricity than we can consume. Solar – shown in yellow – is simply knocking off the top of the peaks in demand that would otherwise be serviced by what has become quite expensive, and hard to secure gas.

Generation over time by fuel type across the December 2017 period

Source: Green Energy Markets analysis based on NEMreview data

So let’s zoom forward to 2021 when the ACCC recommended that the solar SRES rebate should be abolished.

Firstly, there’s going to be a lot more large scale solar farms in place, not just rooftop solar. According to Green Energy Market’s power plant database, projects under construction or contracted will lift large scale solar capacity to more than 5000MW. These will generate around 12,000GWh per year. We’ve allocated that generation across 30 minute time intervals according to the 2017-18 generation patterns of a combination of Nyngan, Broken Hill, Moree and Royalla. Given these projects are all in NSW it won’t be a perfect representation of the far broader geographical distribution of Australia’s solar farms but should give us a reasonable idea.

In terms of rooftop solar, according to the Australian Energy Market Operator these solar systems are projected to generate 13,419 gigawatt-hours of electricity in 2020-21. That’s up on 2017-18 levels by 85%.

So as an approximation let’s lift the NEM’s rooftop solar’s output by 85% across each 30 minute timeframe.

The chart below details how December 2017 would have looked with this extra solar assuming that it displaces gas in the first instance (because it is an expensive fuel) and then black coal.

Generation over time overlaying 2021 levels of solar on December 2017 demand and solar conditions.

Source: Green Energy Markets analysis based on NEMreview data

We can see that solar is now one of the largest sources of power during daylight periods.  Between 9am and 5pm solar represents a quarter of the NEM’s power supply during this December period, and it peaks as high as 43%.

But we are a very long way from having so much solar that it exceeds available demand.

Instead what it is doing is driving black coal down to similar levels which it regularly reaches during night time periods.

If we extend our gaze to look at the impact of the extra solar over average patterns seen across each quarter of last financial year we can see more clearly that what solar will do is create a second off-peak period for the wholesale electricity market.

 

2017-18 National Electricity Market generation by time of day and fuel type after superimposing 2021 levels of solar capacity

Source: Green Energy Markets analysis based on NEMreview data

Essentially, between 10am and 2pm solar will carve out a remaining amount of demand for other generators down to levels typically seen over 2am to 4am at night.

Now it just happens that this probably won’t be much fun for those owners of electricity generators who seem to be complaining about too much solar. This is because historically between 2am to 4am at night power prices dip down dramatically, as we can see very clearly in the chart below.

Average wholesale spot market prices by state by time of day 2015-2018

Source: Green Energy Markets analysis based on NEMreview data

It’s worth noting this also happens to be bad news for all those householders that have been rushing out to install solar systems.  This is because the average solar system being installed on residential rooftops these days has become quite large. 6.6 kilowatts has become the defacto standard and such a system could be expected to export about 70-90% of its output. Those exports can only be expected to receive the average going wholesale market price of electricity.

But, contrary to the suggestions of some, such as the Grattan Institute, this certainly isn’t a problem for electricity consumers more generally. In fact, it’s great news for them. Especially those that may be likely to occupy their home over daytime periods such as pensioners, the unemployed and those with young children – but only if they take advantage of time of use tariffs.

Are we at risk of overloading the distribution network down at the local distribution transformer level leading to blackouts?

The computer says no.

That would be the computer in your solar inverter.

Now it is true that solar systems, by injecting power into the network do act to lift voltages in the local area in which they are installed. But you needn’t worry about it overloading local distribution transformers, causing them to trip-off and cause blackouts. The output of solar systems are controlled by an inverter which continuously monitors the voltage of the network. In circumstances where the voltage is getting close to levels that networks deem too high, the solar system will either cycle its output or shut it off completely to prevent driving up voltage any further.

But there’s something else you should be aware of: voltages on our electricity networks are being run at levels far above where they should be, which is 230 volts. University of NSW researchers, using 2000 Solar Analytics devices that monitor voltage in households across the states of SA, Victoria, NSW and Queensland found that the typical voltage on the network tends to be close to 245 Volts whether its day or night-time. They are only operating close to the standard of 230 volts for less than 1% of the time.

This might be understandable in Queensland, which has only just recently adjusted its standard down to 230 volts, but for the other states this standard has been in place for a long time. In fact Standards Australia agreed a plan to move Australia from 240 Volts to 230 Volts back in 1983.

If the networks adjusted the voltage settings of their transformers to the standard they are supposed to be adhering to, then we should be able to absorb substantially greater amounts of solar capacity in the network without voltages exceeding levels we’ve found to be perfectly acceptable to power our appliances for decades.

Below I’ve provided a chart from the UNSW research on duration of different voltages they found on Victorian distribution networks for daylight and non daylight hours. The first thing to note is that the median for voltage lies substantially above 230 volts and it is incredibly rare that voltages are close to 230 volts. The second thing that’s very interesting is that voltages during night time are actually higher than they are during daytime when solar is generating. This is because voltage is also influenced by how much electricity demand is on the network (higher demand generally leads to lower voltage) and demand is generally lower over the non-daylight periods.

Victorian voltage distribution – daylight and non-daylight periods

Source: Stringer, Bruce and MacGill (2017)

Now in the case of South Australia which has substantially greater solar penetration, voltages are skewed to be slightly higher during daylight hours rather than night time.  However, you can also see that if we shifted the base settings toward 230 Volts then the highest voltages would be closer to where the median is at present, while the distribution would still rarely fall below 220 volts – which is what appliances across many parts of Europe regularly operate at without problems.

South Australian voltage distribution

Source: Stringer, Bruce and MacGill (2017)

So are we on the verge of too much solar?

Probably yes if you’re the existing owner of an electricity generator, but probably not for everyone else. And certainly not if you happen to be concerned about global warming.

About our Guest Author

Tristan Edis is the Director – Analysis & Advisory at Green Energy Markets. Green Energy Markets assists clients to make informed investment, trading and policy decisions in the areas of clean energy and carbon abatement.

You can follow Tristan on Twitter @TristanEdis.

10 Comments on "Too much solar? For whom exactly?"

  1. Hi Tristan, regarding your comments about the rebate. I quote you in two lines below.

    Firstly the word rebate. The rebate is actually a subsidy, which is actually a levy. The levy is not applied exclusively to those who install solar panels, the levy is applied to all electricity users, but not referenced on their electricity bills (no transparency), increasing electricity bills. The levy then has GST applied to it (no transparency). Those with solar installed then have some of that levy returned to them, which reduces their electricity bills. Typically the people and businesses with solar panels are not in the lowest economic group. The net result is your “rebate” increases cost of living for the lowest income groups and reduces cost of living for the higher income groups – that is effectively transfer of wealth from poor to rich (in simple terms).

    Secondly your implicit assumption that subsidised solar panels on roofs in Australia can have any effect on global warming is far removed from reality and deserves to be called out as fanciful ideology. In other words, “you’re dreaming mate”. I encourage you to provide some evidence to support your position on this topic.

    “So are we faced with a serious problem of there being too much solar and does that mean we should scrap the rebate?”

    “Then there’s also an issue about do we care about the dangers to our children and others around the world from global warming, and is this solar rebate a worthwhile expenditure to address these dangers?”

    • Hi Ben,
      I wonder if you could clarify your second argument a little, as I’m not sure what the angle is.
      It seems intuitive to me that energy produced from rooftop solar would otherwise have come from fossil-fuel power sources and so has reduced power-related carbon emissions from a business-as-usual scenario. The subsidies would seem to have accelerated the uptake of rooftop solar (this makes economic sense) and helped get the cost of solar down.
      If your argument is more around this phenomenon only representing a fraction of carbon-intensity of the Australian power industry, which is a fraction of Australian emissions overall, which is a fraction of the world’s emissions, then I sort of see what you’re saying, but I would offer two rebuttals to that:
      1. There’s an important difference between something having a small effect and having no effect. A lot of small effects added together make a big effect. Arguing that this is too small to make any impact is like arguing that there’s no point voting in elections because one vote won’t sway an election.
      2. Global warming is a global problem and demands that human society works together across borders, continents, political divides, etc. to solve it. Australia is a developed country with excellent renewable resources, and so is well-placed to lead the global economy through a transition to sustainable, fossil-free energy systems. We may be a small player in terms of things like GDP and population, but small players can punch above their weight particularly in kick-starting things (indeed as Australia did with solar PV R&D). It’s a depressing thought to believe that we might as well not bother trying to do anything meaningful or important because we’re too small to make a difference.
      Feel free to correct me if I’ve misinterpreted what you were trying to say, or shoot down any of the points I’ve tried to make!
      Tristan, loved the article, there’s some graphs and data analysis here that I haven’t seen anywhere else in this debate and help cut through the spin and misinformation.

      • Hi Jonathan, the renewable incentive schemes have certainly absorbed some of the market share of coal and gas generation, and hence emissions, there’s no doubt about that.

        Your point 1 (the voting analogy) only works if each solar panel has an equal value in addressing emissions (incorrect because of global and regional solar resource variability), if each individual has equal access to a solar panel (incorrect because of differences in subsidies / cost / income / infrastructure), and other implicit differences e.g. are human emissions the root cause of global warming in the first place… plenty of debate there! This analogy also only works if each individual (or even country) has an equal say in emissions – plainly incorrect when you consider the EU, India and China who have no emissions reduction agenda.

        To your point 2: if emissions are directly “the greatest threat to humanity” then the IPCC should recommend the logical action that will have the quickest and greatest emissions reduction – rapid deployment of nuclear power generation. The fact that the IPCC does not recommend nuclear, and instead recommends variable renewables is telling. If emissions are the greatest threat, surely the most logical response is to reduce emissions rapidly on a large scale, therefore surely nuclear energy would be the recommendation?

        Alan Finkel stated that Australia can make no measurable difference to global temperature. This is an incontrovertible fact.

        There is no “global community” working together to reduce emissions.

        The IPCC does not recommend the logical obvious step to reduce emissions.

        Nothing I’ve said above is controversial, hopefully that helps you to understand my objection to subsidies(or levies, these are not rebates).

  2. Hi Tristan, regarding a couple of statements in your blog post, I feel obliged to highlight what I believe could be some factual errors.

    “Solar – shown in yellow – is simply knocking off the top of the peaks in demand that would otherwise be serviced by what has become quite expensive, and hard to secure gas.”

    The afternoon load peaks in the NEM occur after combined solar output has begun to reduce. I agree there is some overlap between combined solar output and afternoon load peaks, but the amount of overlap differs across the regions and the time of year. I believe it is misleading to state in simplified fashion that, “solar reduces the load peaks”. The duck curve created by the day time solar output forces dispatchable sources to increase their output at a faster rate than without the solar.

    I agree with your analysis that in terms of bulk quantity of electricity generated, solar is nowhere near the amount of electricity demanded. No argument there!

    But what you might have given is a summary of the various recommendations and concerns from AEMO about inertia, fault level and other grid stability matters. For example in SA there is a minimum combination of synchronous machines required to remain on the grid, with AEMO regularly and increasingly being forced to intervene to ‘direct’ renewable asynchronous generators to reduce output and synchronous generators to start or remain online. There are plenty of reports on this in the public domain.

    I suggest that the intent of the conversation being directed by the various stakeholders in the NEM is more around the quality and stability of the grid, rather than the absolute quantity of solar power being generated.

    Regarding the voltage, the allowable limits for voltage are 230 volts +10/-6%, which is the range set out in Australian Standard (AS) 60038 (Standard voltages).

    230 x 1.1 = 253 V

    Another note on this is the transformers closest to the loads are only manually adjustable off-load, so they have to be set to cater for voltage swings between day (solar inverters pushing up voltage) and night (no solar inverters). Transformers at higher voltages and substations can be adjusted online from the control room.

    This could be why there are limits on both the capacity of individual household solar panel installations and the number of solar panel installations on a particular distribution transformer.

    Hope that helps?

    • Ben,

      If you look at the first chart illustrated patterns on December 2017 and in particular the days with the highest peaks it shows quite clearly that the absolute peak occurs where there is a whole lot of yellow. The peak which occurs with the red colour is lower than the peak that has yellow. You see similar results in January and February which tend to be the other months where peaks in NEM-wide demand occur.
      Secondly, if you look thoroughly at the voltage distribution charts you’ll see they provide two lines – one for night-time voltage and one for daytime voltage. In both cases the voltage distribution is very similar and reflects the fact the voltage is clearly not remotely aimed at achieving nominal voltage of 230V. The point of this is that in most cases the networks could adjust the transformer taps (yes I know this is done manually) to deliver lower voltage and not be at much risk of falling to voltages that were too low, while allowing significant room for solar to push voltages up without much risk of reaching excessive voltage levels.
      On your point about maintaining frequency/fault levels etc. yes these are legitimate issues in the case of SA’s very high levels of renewables penetration but not a major issue in other parts of the NEM and were not the subject of media reports which I am addressing in this article which mentioned issues such as overloading transformers and causing blackouts and producing far more solar generation than could be absorbed by demand. I would note that many of SA’s issues (exception of fault level) will be largely resolved with SA-NSW Riverlink interconnector that has been recommended in AEMO’s ISP. I find it quite irritating that the media uncritically report complaints by some sections of industry to support a nation-wide change in policy which when you scratch the surface are based on solar reaching very high penetration on boxing day in a single state representing a small portion of NEM demand and which will be resolved by undertaking actions that AEMO has already recommended and are in the process of being implemented.
      I won’t bother to address your argument about emissions because you make a series of assertions that reflect someone who I suspect has made up their mind a long time ago that they find the conclusions of Academies of Science across all major countries so unpalatable that you have become impervious to logic, evidence or just simple ethical regard for your fellow human being, particularly the poorest of the world who are most vulnerable to the impacts of global warming.

      • Tristan,
        With regard to the street level transformers averaging above nom 230v; would you agree that firstly, current is lower, therefore transmission more efficient. Secondly, domestic PV presents as a sudden load when a cloud covers the sun momentarily, at the same time the line voltage drops, so the line loses are momentarily compounded. Voltage drops because loss of PV and sudden increased load on the grid causing any inductive load to draw even more current. The upshot is the swinging loads caused by domestic PV at a local level are problematic. Power factor can also swing due to local conditions. Batteries will help but they are an extra cost.

  3. Thanks Tristan, I’m happy to be corrected on the peak load, you are right that the ‘behind the meter’ solar output from rooftop panels is greatest during the day. I had been looking at the AEMO dashboard which of course only shows the solar output as a reduction in demand during the day. The unintended consequences I have mentioned (dispatchable generation ramp rates) still apply.

    I’m pretty happy though with the logic I have presented on subsidies, nuclear generation and emissions. This logic is, after all, not open to attack because it is based on facts.

    Switching the argument in an attempt to prescribe guilt at the theoretical unproven sometime in the future (maybe) plight of the world’s poorest is difficult to align with the argument that for zero effect on global emissions, Australia has some of the highest power prices in the world, which disproportionately affect our own poorest citizens. Choosing this style of argument does nothing to help the world’s poorest, even if they are prone to some consequences of ‘climate change’ – refer my argument above on the IPCC recommendations – since actions in Australia to subsidise renewable energy can have no effect on those people.

    If you think it will have an impact, and that I am “impervious to logic”, then please take the opportunity to educate me and other readers.

    Regards
    Ben

  4. Ben
    Thanks for methodically taking this claptrap to task. Tristan traditionally takes a one dimensional view when developing his pro renewable propaganda. That the ESB, AEMO and other responsible authorities need a lesson on the virtue of solar panels is a preposterous assertion.

  5. Tristan, I think you need to understand how distribution low voltage feeders are necessarily designed. Bottom line is domestic demand peaks always occur after rooftop PV is essentially gone for the day. So the design criteria for the feeder is around the peak load. Now a transformer is actually a voltage source – built to a price with fixed tap changing. The lengths of low voltage feeder runs are determined by the allowable voltage drop along its length. It is a compromise. A customer connected near the transformer will see high voltage (at the top of the allowable range) whereas a customer near the end of the feeder run will see voltage at peak demand near the bottom of the allowable range. The transformer off load tap changers (normally 2.5 % steps) allows a small degree of tuning to this profile over time. This is simply good engineering design – function at least cost. The overnight voltage difference will be small simply because domestic overnight load is small – volt drop goes away as an impact. The problem with distributed generation is suddenly the volt drop issue runs in reverse with power flows back towards the transformer in mid morning to early afternoon – very little domestic load (empty houses) and peak solar irradiance. The design criteria is basically now completely wrong. The solution is the installation of on load tap changers to distribution transformers (usually a transformer change out) – not normally very attractive as distribution transformers are generally set and forget – tap changers are not – or you install more transformers and shorter LV cable runs. Both solutions are going to cost money that will end up in the capital base of network service providers (what happened to “causer pays”?). This stuff is not free.

  6. In amongst the questions that form the premise of the article could be another question:
    if we are providing subsidies to large scale generation of RE including utility solar plants (i.e. to corporations) in the form of LGCs (soon to be quite modest if RET target is not extended past 2020) then should small businesses and householders be able to participate in the same kind of benefits?

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