South 's Energy Solution A secure transition to affordable

www.energymining.sa.gov.au South are proud that our We will also work with SA Power Networks to bring Foreword forward $10 million to enhance voltage management power system has achieved many this year. Each and every day, this saves consumers global “firsts”, but are painfully money by making appliances and rooftop solar systems aware of the economic and social work better. It will allow us to host more rooftop solar securely and provide the critical conditions which AEMO costs of a disorderly transition. says it needs. For over a decade, the growth in rooftop solar PV has We have been taking precautionary steps for over a year helped consumers manage their energy costs and working with AEMO, SA Power Networks and ElectraNet reduce emissions, but also disrupted the energy market by updating protection schemes, introducing new and challenged how we manage the power system. Now, operating rules, and also new standards to deal with low a third of South Australian homes have rooftop solar. demand. In 2017, the Australian Energy Market Operator (AEMO) At the same time, we’re leading the world’s largest warned that the growth in solar power could reduce per capita roll-out of home batteries and have four net demand on the grid to zero by 2025 and requires batteries installed or being further developed. We’re careful management. When it brought that forward demonstrating how they can be used to stabilise the the next year to 2023, the Government partnered with grid. AEMO, SA Power Networks, ElectraNet and the Essential Services Commission of (ESCOSA) to look South Australia’s previously unmanaged transition to into the future, and commissioned cutting-edge power 50 per cent renewable energy came at a significant system modelling by AEMO. economic and social cost. And fortunately, we have identified this legacy risk before history repeats itself. This world-leading modelling has exposed that under extreme conditions there are underlying risks to energy The Government wants an orderly transition to our security due to a decade of unmanaged growth in new goal of net-100 per cent renewable energy, whilst rooftop solar PV and recommended urgent actions to reducing bills even further and growing our economy. address this legacy by Spring this year. This requires the right mix of interconnection, storage, The South will generation and smart technology to balance supply and It shows that it is absolutely critical for power system demand. security to deliver Project EnergyConnect (the SA-NSW demonstrate genuine global leadership interconnector) as soon as possible. Without it, South Our Government will do it the right way, so that it Australians face unacceptable power system security benefits South Australians and encourages other places by achieving net-100 per cent renewable risks, a moratorium on new rooftop solar, as well as to reduce emissions more quickly. “ expensive interventions to bolster the grid and retrofit That’s why we are doing the hard things now to address existing solar house by house. past legacies and anticipate future challenges, and will energy through an orderly transition Until Project EnergyConnect is delivered, we will not yet follow the best expert advice to keep our system secure. be out of the woods. which delivers economic growth and We now understand that a portion of the rooftop solar installed over a decade turns off during disturbances, competitive power prices for South amplifying shocks and making it harder to recover. This is most acute at times when rooftop solar provides the Australian homes and businesses. great majority of the system’s needs. AEMO has advised that it needs backstop capabilities Hon Dan van Holst to manage rooftop solar, like it has with all other Pellekaan MP generators, to balance the system in extreme circumstances. Whilst this technical capability has been Minister for Energy and Mining in solar systems installed since 2016, that capacity is not Government of South Australia ” actionable for AEMO. To make sure consumers can keep adopting rooftop solar, we will deliver Project EnergyConnect and implement early the direction of new national standards to make that backstop actionable.

1 South Australia's Energy Solution Government of South Australia June 2020 2 The context

For over a decade, South Australians In November 2018, AEMO’s South Australian Electricity Report updated its forecasts for negative operational demand have been the world’s earliest to 2023, noting that the SA-NSW Interconnector (Project and most enthusiastic adopters of EnergyConnect) would “improve system security and rooftop solar. resilience by reducing the risk of islanding of the South Australian network and helping mitigate system security This means that to AEMO’s knowledge, South Australia has risks under minimum demand conditions”. the first gigawatt (GW) scale power system in the world which in coming years can generate as much power from The South Australian government took precautionary rooftop solar to provide its midday needs. action and began working with AEMO, SA Power Networks, ElectraNet and ESCOSA to better understand the challenges In November 2017, AEMO’s South Australian Electricity Report of managing low operational demand conditions and the forecast that rooftop solar could cause negative operational behaviour of rooftop solar during disturbances. The South demand by 2025 which may “introduce operational Australian government commissioned ground-breaking challenges for balancing the power system. The power power system modelling by AEMO to understand what system and market will need to evolve to address these action, if any, was needed. challenges, including utilising the opportunities from new technologies” such as storage and greater interconnection. AEMO has now determined that negative operational demand under normal conditions could occur in 2022, but In August 2018, a lightning strike on transmission under extreme conditions could be achieved by Spring To AEMO’s knowledge, South Australia infrastructure in caused a disruption 2020 on a sunny and temperate day with low economic throughout the national market which resulted in South activity, such as a public holiday. Australia separating (islanding) from the National Electricity is the first gigawatt scale power Market. The size of the disruption was increased by the The report outlines that until Project EnergyConnect and rooftop solar reducing its output due to many inverters new smart capabilities for rooftop solar are in place, South system in the world to approach zero “tripping" and turning off during the disturbance. Australia will remain at an unacceptable risk of another “ black system event. operational demand due to such 00 high proportions of demand met 00

200 by distributed resources. Analysing 000 these types of periods requires the 00

00 development of new sophisticated

00 2019 2020 models and pioneering of new 200 2021 2022 Net grid demand after rooftop solar 0 approaches. 2023 200 2 A A 2 2 A — Minimum operational demand thresholds in South Australia AEMO Technical Report” - May 2020

Photograph Andre Gascoigne

3 South Australia's Energy Solution Government of South Australia June 2020 4 Two key challenges

The report from AEMO identifies two key challenges that must be AEMO has declared that delivering corrected immediately to manage the risks from a decade of rooftop Project EnergyConnect as soon as solar uptake: possible is absolutely critical for the 1. Ensuring rooftop solar PV 2. Minimum demand when operates during disturbances operating separate from the ongoing secure operation of the There is now considerable evidence that many of the National Electricity Market inverters which manage the power generated by If South Australia is separated from the National power system. If this project and new solar panels will disconnect in response to voltage Electricity Market, there needs to be sufficient demand disturbances. This could occur with a sudden outage and the right combination of power generators to smart standards for rooftop solar at a large power generator, amplifying the impact provide enough system strength, inertia, voltage upon the grid. When rooftop solar is providing a large management and frequency control to keep the amount of the state’s power needs, such an outage system secure. That means AEMO needs the same do not proceed, a moratorium on requires careful management to be able to rebalance capabilities to manage rooftop solar that it has for the power system. This means that operating protocols other types of generators to ensure it has the right new rooftop solar installations and and parameters for the power system need to be mix of resources to best manage those exceptional updated to manage such an occurrence. This also circumstances. Whilst the existing standard for solar means that improved standards and testing for solar inverters established in 2016 mandates remote other expensive interventions will be inverters are needed to make sure that new and management capabilities, the communication replacement solar installations will help maintain pathways and protocols do not exist to activate this required to be able to maintain power power system security in disturbances. feature. This will require new standards. AEMO’s report recommends that back-up capabilities be established “When South Australia is operating as to manage solar output in emergencies, such as it did system security. an island, it is now almost impossible in February for larger rooftop solar and grid scale solar to maintain the frequency operating when South Australia separated from the national standard for certain credible fault events market when storms damaged transmission towers in if they cause distributed [rooftop solar] PV . disconnections. This means that AEMO may no longer have the means to operate “South Australia has already experienced a South Australian island securely at times operational demand as low as of high distributed PV generation and, 458 [megawatts] MW, and this is expected as such, security risks will grow rapidly to reduce further by spring 2020. That as more distributed PV is installed if the means there is an urgent need to establish mitigating actions… are not implemented.” a back-stop that allows AEMO to curtail distributed PV when extreme and unusual — AEMO Technical Report operational circumstances arise.” — AEMO Technical Report

5 South Australia's Energy Solution Government of South Australia June 2020 6 In the time it takes you to finish The huge transition currently underway across the energy system means that all states will need to grapple Taking action your morning coffee, an Australian with the scenarios outlined in the short term and the household will have connected work contained in the report will serve to guide national its new rooftop solar system and frameworks to better integrate solar PV into the National effectively removed its household Energy Market. load from daytime grid demand. At AEMO, our goal is to make sure that consumers in South Australia and across the nation are able to take full Currently, a new solar (PV) system is being installed on an advantage, both economical and operationally, of this Australian home every six and a half minutes. With more technological revolution while not compromising the than 2.2 million solar installations in place at the beginning overall secure, reliable and affordable operation of the of 2020, Australia is leading the world in the uptake of power system. rooftop solar. We are delivering all the While we all can see that our power system is going immediate actions recommended Today in South Australia, solar PV currently has the through the same type of transformational change capability to provide more than 1 GW of energy under the that many of us have witnessed in computing and by AEMO to help manage right conditions, meaning that “consumer” power is by far telecommunications, there are two things that will never extreme conditions until Project the state’s single biggest generator. This already world- change and must be respected – electricity will continue to EnergyConnect is delivered. leading level of solar uptake is increasing by more than obey the laws of physics, and as an essential enabler of our 200 MW, equivalent to the size of one unit of the state’s economy, it must also remain affordable. These actions will allow us to support energy security largest gas-fired plant, each year. whilst allowing more households and businesses to AEMO’s recommendations to the South Australian securely choose rooftop solar: In AEMO’s recently published Renewable Integration Study government aim to make sure that both can occur. we laid out a multi-level game plan of the adjustments we 1. working with SA Power Networks to bring forward will need to make in the operations and rules governing $10 million to enhance voltage management to the power system that will allow us to accommodate a improve the performance of appliances and solar future where the majority of electricity can be supplied by systems, allow more solar on the network and renewable power. provide emergency backstop capabilities in case of extreme conditions Further to that, AEMO has undertaken a technical analysis 2. accelerating new smart solar standards ahead of at the request of the South Australian government national changes so that solar supports the grid which examines the effects of small-scale residential and — Audrey Zibelman during disturbances commercial solar PV in the state, its impact on the security CEO, Australian Energy of the system under certain scenarios and recommends 3. establishing constraints to manage the Heywood Market Operator a range of actions to ensure the continued secure and interconnector to reduce the risk of the system reliable operation of the network. until Project EnergyConnect is delivered 4. updating protection schemes and emergency The technical report’s recommendation includes protocols to make sure they are fit for purpose in improvements to distributed voltage management, low demand conditions greater interconnection such as the proposed Project EnergyConnect project and new emergency capabilities 5. increasing fast frequency control through the Grid applied to solar PV for AEMO to manage the output of what Scale Storage Fund and rollout of home batteries. is now a vast amount of generation in cases of emergency. We will continue take the best expert advice and work AEMO considers each of these actions to be required for with AEMO to restore the resilience of the grid. solar PV to support full consumer choice and economic benefit - not making any changes is not a realistic option. If we fail to make the changes required for distributed energy resources integration, the requisite alternative measures would be to limit new solar installations and costly retrofits of existing installations. Further, protective and more costly measures of this kind will become increasingly likely if Project EnergyConnect is not constructed and commissioned consistent with current project timelines.

Photograph Andre Gascoigne

7 South Australia's Energy Solution Government of South Australia June 2020 8 Our energy solution The four pillars Project Grid scale storage Our $50 million Grid Scale Storage Fund is accelerating the EnergyConnect roll-out of large grid-scale to address the The South Australian government is fast-tracking the intermittency of South Australia’s renewable electricity completion of an interconnector between South Australia supplies and improve our resilience. and that will boost power system The Fund is procuring new, cutting edge services from grid Through our comprehensive energy security, reduce bills, improve competition and unleash scale storage, such as the expansion of Hornsdale Power more renewable power. We are providing $75 million in Reserve (the big battery), showing how these technologies underwriting to ElectraNet and TransGrid to deliver the can provide the services once provided from traditional solution, four key pillars underpin project in the fastest time possible. power stations. This includes fast frequency response Project EnergyConnect's 800 MW capacity will be able to which keeps the frequency in safe limits by synthetically our orderly transition to more clean, deliver enough energy to power 240,000 homes and is mimicking the inertia that traditional generators provided. “ critical to reduce the likelihood of South Australia being The Fund will improve our system security, while increasing affordable and reliable power. separated from the rest of the National Electricity Market. competition in the electricity market and utilising stored It will also allow us to export our excess renewable energy renewable energy to meet help peak demand and stabilise supply when demand is low. Its development will make the system. South Australia an attractive place to be build new large Future projects will be announced during 2020 as renewables projects and help secure billions of dollars of agreements are finalised. additional investment in renewable energy projects and ” hundreds of jobs along its route. The Project is advancing through the Australian Energy Regulator’s process to ensure consumers receive value for money, and final approvals are expected by year’s end. Home batteries Distributed energy South Australia is leading the world’s largest per While weather has always impacted demand as heating capita rollout of smart home batteries. This will help and cooling drive consumption, in South Australia weather make the most of our rooftop solar to reduce prices also drives supply due to our abundant wind and solar and support the grid. As of early June 2020, nearly energy. To make the most of this, we need to better align 150 megawatt-hours (MWh) of battery storage was installed consumption with periods of high renewable generation with significant additional capacity pending installation. and make the most of “distributed energy” such as rooftop solar and smart appliances through our $30 million This means that the collective storage capacity of home program. batteries in South Australia is now larger than the original size of the , the then biggest We have allocated $11 million of funding to bring forward battery in the world. new business models which can trial demand management to reward consumers whose homes and businesses The roll-out is supported by the $200 million Home support the grid. At the same time, we have secured Battery Scheme grants and loans, the SA Virtual Power national law changes to reward businesses who want to Plant on Housing Trust homes with Tesla, and provision reduce demand, and secured new national smart appliance of batteries to homes being rebuilt after recent bushfires. standards so that households can have smarter homes. Home batteries help store excess rooftop solar energy for use during times of peak demand in the early evening to We are also demonstrating and accelerating enhanced reduce prices. voltage management, to allow us to host more solar in a secure manner whilst improving the quality of power that Households are being rewarded by joining Virtual Power people receive, to make their solar and appliances work Plants. The South Australian government is demonstrating better. how these can together provide grid stability to support the security of the whole grid. By better aligning supply and demand, we reduce the need for peaking generation and make the most of our abundant renewable energy.

9 South Australia's Energy Solution Government of South Australia June 2020 10 Investment in We are confident that through continued strong collaboration, and the grid “wise investments, we can support the state’s vision of achieving net-100 per The South Australian government will demonstrate genuine global leadership cent renewables. by achieving net-100 per cent renewable energy through an orderly transition — Rob Stobbe, CEO, SA Power Networks which delivers economic growth and competitive power prices for South ” Australian homes and businesses. As renewable energy replaced output from traditional generators fuelled by coal and gas, the power system lost the system strength they provided. This means that we need to further invest in our grid to get the most out of our renewable energy opportunities. With some of the highest rates of rooftop solar in the world, we are also the first to learn about the challenges in managing a system with very high levels of rooftop solar and low levels of midday Hornsdale demand. With AEMO predicting that 90 per cent of power generated in battery South Australia could be from renewable sources by 2025, the government is focused on investing in our grid to keep our system secure and bring down prices. expansion Whilst Project EnergyConnect is being delivered, AEMO has The Hornsdale Power Reserve is being expanded instituted new operating protocols to manage low demand by the Grid Scale Storage Fund by 50 per cent to conditions and manage our key link to the National Energy Market – provide a much faster and bigger response to the – to boost security. system disturbances and store more power for peak demand. Synchronous condensers are being installed to provide system strength whilst reducing bills by reducing our reliance on expensive The expansion is the world’s largest gas generation for security. demonstration of how battery storage can provide synthetic inertia, protecting the security We are investing in fast frequency response which stabilises the of the grid by keeping frequency consistent. It system through world-first demonstrations from grid scale batteries will result in a more secure and affordable power and home batteries which can provide the same services through supply for the state. Virtual Power Plants. We are also improving the quality of power delivered to people’s homes, by investing in voltage management so we can host more rooftop solar and improve the performance of solar systems and appliances. We are also securing a change to the national rules to reward energy consumers who can change their demand to make it cheaper to manage the system. These investments in power system security make South Australia a global proving ground, allowing other jurisdictions to better plan their transitions to renewable energy. Significant and prudent investment in our grid will make power more affordable, reliable and clean.

Photograph Andre Gascoigne

11 South Australia's Energy Solution Government of South Australia June 2020 12 1 Project EnergyConnect 4 Grid fast frequency response Project EnergyConnect is being fast-tracked to keep South More fast frequency response from grid batteries is being Australia connected and reduce the risk of having to operate procured, such as the expansion of Hornsdale Power Reserve, Investment in as an island. to make rapid corrections to address imbalances in the power Delivery: 2022 (stage 1) & 2023 (stage 2) system. Delivery: 2020 2 Heywood interconnector 5 Virtual Power Plant fast frequency the grid Until Project EnergyConnect is delivered, new operating parameters for the Heywood interconnector will reduce the response risk to South Australia if islanding occurs.. Fast frequency response is being demonstrated in Virtual Delivery: 2020 Power Plants made up of home batteries to allow them to provide similar grid services to big batteries. 3 Synchronous condensers Delivery: 2020 Synchronous condensers mimic traditional generators and Significant and prudent investment will deliver a base level of system strength and improve its 6 Improving voltage stability. New enhanced voltage management technology will in our grid will make power more Delivery: 2020-21 address emerging voltage issues and provide emergency management capabilities, improving appliance and solar affordable, reliable and clean. performance whilst allowing more households to take up “ solar power. Delivery: 2020

7 New emergency powers 1 New Emergency Management Act powers and procedures ” will give us to the tools to keep a secure power network if emergencies occur in periods of low demand. 6 Delivery: 2020 7 8 8 Updated protection schemes Emergency protection schemes such as the Under-Frequency 4 Load Shedding scheme are being updated to ensure they continue to operate in low demand conditions. Delivery: 2020 9 9 Demand Response Rule South Australia proposed and secured national rule changes to reward large users who can modify their demand to help meet the needs of the system. Delivery: 2021

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13 South Australia's Energy Solution Government of South Australia June 2020 14 Smarter homes We are determined to make a step- change to a smart power system – “where smart homes’ solar, batteries, appliances and eventually electric vehicles will work together to deliver The South Australian government is committed to putting consumers at cheap and cleaner power. the heart of our energy system. We believe that households and businesses should have the greatest possible access to renewable energy and smart technologies to improve their quality of life and cost, so that together we can reduce carbon emissions whilst improving our prosperity and quality of life. ” We are determined to make a step-change to a smart power system – where smart homes’ solar, batteries, appliances and eventually electric vehicles will work together to deliver cheap and cleaner power. Voluntary And by making the most of the solar power generated on our homes, more households will be able to take up rooftop solar and our grid can remain secure. automation Our transition to a smart power system will need the right technology and the economic signals to reward supportive of demand behaviour. We’re making sure that households have the right response technology by bringing in new smart standards for solar Through its Demand Management Trials, the systems and batteries, and key appliances such as hot South Australian government is supporting water, air-conditioners, pool pumps, and electric vehicles. Amber Electric to showcase how a smart hot water system, pool pump, or household battery We’ve got the world’s largest home battery roll-out and can automatically use cheaper power to reduce Virtual Power Plants, along with trials of new demand bills. management offers which are rewarding customers for supporting the grid through automating appliances and Customers can then save money by using backup power supplies. cheaper power at the best time on windy or sunny days while reducing pressure on the more New retail obligations mean that households will be able expensive peak demand periods. to take advantage of cheaper “solar sponge” prices in the daytime and have access to discounted upgrades to improve their efficiency and smart capabilities. These are being introduced now so that as people buy new appliances and solar systems we can reward consumers with lower bills for supporting the grid.

15 South Australia's Energy Solution Government of South Australia June 2020 16 1 Cheaper daytime power prices 5 Smart appliance standards New “solar sponge” tariffs mean consumers can choose Smart appliance standards help create smart homes, reducing cheaper power prices in the middle of the day to make use of pressure on the grid and saving money by automatically using Smarter homes abundant solar power and reduce peak demand. power when it’s cheapest. Delivery: 2020 Delivery: 2021

2 Smart solar standards 6 Smart energy retrofits Retailers will be obliged to deliver smart energy saving Adopting solar requirements mean that solar output can activities to customers which help them use power when it’s be managed to support security during emergencies and cheaper and make the most of the solar power they produce. operate within the limits of the distribution network, allowing Delivery: 2021 us to host more rooftop solar on our network. Delivery: 2021 Smarter homes can work 7 Demand Management Trials 3 Improved inverter standards Demand Management Trials are testing new technologies which can reward customers for supporting the grid by automatically in the background to To support the grid, new standards will make sure that solar automating their energy usage. continues to operate during disturbances and does not Delivery: Ongoing “reduce bills and support the grid. disconnect in response to voltage issues. Delivery: 2020 8 Hot water system standards Improved hot water standards will allow households to help 4 Solar system compliance the grid by using more abundant renewable energy and get the most from the solar power they produce. New compliance checks will ensure installations are done ” Delivery: 2020 correctly to protect consumers and support the security of the power system. 9 Delivery: 2021 Virtual Power Plants New Virtual Power Plants are rewarding households whose batteries and solar support the grid by helping meet peak demand and responding to disturbances. Delivery: Ongoing 8

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17 South Australia's Energy Solution Government of South Australia June 2020 18 Acknowledgement of Country We acknowledge and respect the Traditional Custodians whose ancestral lands we live and work upon and we pay our respects to their Elders past and present. We acknowledge and respect the deep spiritual connection and the relationship that Aboriginal and Torres Strait Islander people have to Country. We also pay our respects to the cultural authority of Aboriginal and Torres Strait Islander people and their nations in South Australia, as well as those across Australia.

Further information

Department for Energy and Mining

T: +61 8 8226 5500 www.energymining.sa.gov.au