By Daniel Mercer

Posted Sat at 8:31am

Falling demand for electricity caused by the economic fallout from the COVID-19 pandemic could leave Western Australia’s main electricity system at risk of a solar power overload within months, experts have warned.

Industry figures say the slump threatens to reduce the demand for electricity from the grid to a level where output from the region’s 300,000 household solar panels could overwhelm the system, potentially triggering rolling blackouts.

The situation has prompted WA Energy Minister Bill Johnston to say the McGowan Government is “monitoring things very closely” and the body that operates the market to stress it has contingencies in place to safeguard the system.

Surging solar strains system

Adam McHugh, an honorary research associate at Perth’s Murdoch University, said in a worst-case scenario, the electricity system could suffer critically low demand as soon as this year.

A report by the Australian Energy Market Operator (AEMO) last year warned the system risked becoming “inoperable” by 2022 because of the surging levels of renewable energy coming onstream.

At issue is the sharp decline in demand for electricity from the grid during the day as ever-growing amounts of output from rooftop solar panels displace production from coal and gas-fired power stations.

In its report, the AEMO said solar was hollowing out demand to such an extent on mild, sunny days when electricity use was low — typically in autumn and spring — the system would soon be in breach of technical limits.

The AEMO said these limits would be reached when demand on the grid fell to 700MW, below which traditional thermal plants such as gas and coal struggle to stay on, endangering the essential “firming” services they provide to keep the system stable.

Mr McHugh said this could take place within six months if there was a fall in demand for electricity comparable to countries such as Italy, where consumption has plunged about 20 per cent.

Rolling daytime ‘whiteouts’ possible

However, he stressed WA appeared to be avoiding the worst effects of coronavirus and there was a strong chance the state would emerge from the crisis without enduring such an extreme event.

But if it happened, power would go out during the day rather than the night.

“It’s an increased risk relative to where we thought we were a year ago,” Mr McHugh said.

“If demand falls below 700MW there is a risk of what I’d like to call rolling whiteouts, rather than rolling blackouts.

“We’re not in a situation where the lights will go out, because it will likely occur in the middle of the day.

“I’m certainly not saying that it will happen.

“The fact that we now have less economic activity as a result of the partial [shutdown] of the economy [means] demand will be lower because every good and service in the economy requires electricity as an input.”

WA still well above dangerous demand drop

Matthew Bowen, a partner at law firm Jackson MacDonald, where he specialises in energy and regulation practice, said the coronavirus-induced effects on demand had so far been “modest”.

He noted that even with the structural decline in daytime demand and the hit from COVID-19, minimum levels of electricity use on the grid were still more than 1200MW — “almost double” the threshold the AEMO has warned about.

Despite this, Mr Bowen said further big falls in demand could bring forward system security problems for the grid as early as next year.

“The reason the current virus response is relevant is if that produces a significant reduction in overall grid demand, the amount of solar output is not going to change because the sun is still shining,” Mr Bowen said.

“So, the day that becomes a problem for the grid becomes a little bit closer.”

Blackouts would be a ‘last resort’

For Mr Bowen, a more likely risk in the short-term was interventions that would sideline the market and lead to less efficient generation decisions.

Under the market rules, the AEMO has the ability to override the market and control which power stations are generating to ensure the system is managed safely.

Mr Bowen said the AEMO would exercise this option before the “last resort” of rolling blackouts, but he noted it invariably involved using more expensive forms of generation than would otherwise be the case.

“So, the business model gets worse for our energy businesses, and ultimately that will ripple through and could mean more expensive electricity for consumers,” he said.

“What that means is the job of reforming our sector remains as urgent as ever, and perhaps a little more urgent.”

Household power pooling a ‘huge opportunity’

The AEMO said the agency had “enacted our emergency response plans” and was working with industry to manage the fallout from the COVID-19 pandemic.

A spokeswoman pointed out that large industrial customers – which include gold mines, desalination plants and iron ore producers – were continuing to operate and underpin demand from the grid.

Mr Johnston acknowledged the situation by saying he was watching events closely, but he noted the fall in electricity so far had only been “marginal”.

According to the minister, the need to properly accommodate soaring levels of rooftop solar highlighted the urgency of the Government’s recently released blueprint for such “distributed energy resources”.

Mr McHugh said the plan was a sensible way of dealing with the challenges of renewable energy uptake.

He said there was an opportunity for energy companies to pool or “aggregate” small-scale resources such as household solar panels and batteries and use them to help balance supply and demand.

This was not only vital for the smooth functioning of the market but a way for participating households to lower their energy costs because they would be paid for providing the services.

Ultimately, he said pulling together the resources of households as a “virtual power plant” could be a cheaper and more effective way of running parts of the market than traditional power stations.

“This massive resource we’ve got on people’s rooftops and in their garages — it’s a huge opportunity, trying to optimise that resource,” he said.