Independent Review into the Future Security of the National Electricity Market Blueprint for the Future, Jun 2017

Chapter 1: PREPARING FOR NEXT SUMMER

Overview

AEMO forecasts a potential supply shortfall in Victoria and South Australia for the FY2018 summer. AEMO and governments are implementing a number of measures to reduce the potential for energy supply problems.

The Panel is supportive of these measures and is confident that they will improve power system security and reliability. To boost confidence the Panel recommends a third party review of AEMO’s short-term demand forecast techniques used for the FY2018 summer.

Nevertheless, extreme weather events and major equipment failures are always possible. Being prepared in the event of disruption to electricity supply is crucial so electricity supply can be restored as soon as practicable.

1.1 Improving the resilience of the NEM

During consultations, significant concerns were raised with the Panel that more work is needed to secure the NEM and ensure a reliable electricity supply for the FY2018 summer.

While this Review is recommending a package of measures to strengthen the NEM from a medium and longer-term perspective, the Panel considers it prudent to also highlight the actions underway to maintain reliability for the FY2018 summer. Supplying electricity to consumers while maintaining the power system within its specified operating limits during the summer period is crucial.

Heatwaves and the number of extreme fire weather days in Australia are increasing and the fire season is becoming longer.⁷ There is also a strong correlation between hot weather events and increased demand for electricity, primarily driven by an increase in air conditioning loads.

The extreme weather events of the FY2017 summer put immense pressure on the security and reliability of the NEM. The FY2017 summer saw five tropical cyclones, one major fire outbreak, four separate heatwaves, 21 days of major storm activity, and major floods.⁸

The high intensity storms that hit South Australia in September 2016, bringing extremely high winds, tornadoes and lightning, caused significant damage to key electricity infrastructure and resulted in a state-wide blackout. The Preliminary Report outlined the factors leading to the blackout in more detail.

There were three intense heatwaves in south-east Australia in January and February 2017, with the highest temperatures recorded over 9 to 12 February 2017. Electricity demand tends to increase in the third and fourth days⁹ of consecutive hot days, as air conditioners use more electricity to manage the accumulated heat in buildings. Consistent high temperatures over three consecutive days in February 2017 placed significant demand on the NEM, which led to the South Australian and New South Wales power systems being temporarily pushed into insecure operating states (see Box 1.1).^{10 11}

Box 1.1 – Case study – February 2017 heatwave events in South Australia and New South Wales

In early February 2017, the east coast of Australia experienced severe heatwave conditions. These conditions led to an insecure operating state for the South Australian and New South Wales power systems on 8 and 10 February respectively. AEMO intervened to restore security by directing load shedding in both states.

South Australia

On 8 February, temperatures in Adelaide peaked at 41.6°C at 4:00 PM. A combination of issues led to South Australia’s power system not being in a secure operating state at 6:00 PM:

Peak operational demand was higher than forecast (see Figure 1.1).

Wind generation declined more rapidly than forecast.

Rooftop solar photovoltaic generation was declining, as expected, due to low solar resource in the late afternoon.

Some gas-fired generators were forced to reduce capacity due to high temperatures and communications faults.

The Heywood interconnector was effectively operating at its full capacity as it imported power from Victoria.

Prior to the event the Murraylink interconnector was restricted to manage grid voltage constraints, but due to the deteriorating supply and demand balance it was pushed above its operating limits to import additional power from Victoria, thereby creating a security issue.

Figure 1.1: South Australia’s operational demand, forecast and actual, 8 February 2017¹²

Increased supply was needed to restore power system security, but no additional generation could be brought online within the 30 minute requirement. At 6:03 PM AEMO directed ElectraNet to interrupt 100 MW of customer supply to restore system security and avoid the risk of wider scale disruption. The load shedding software used did not operate correctly and resulted in 300 MW being shed and the loss of supply for an additional 60,000 customers (resulting in a total of 90,000 customers being disconnected).^{13 14} By 6:40 PM, AEMO determined that the system had returned to a secure operating state and directed the restoration of load.

Errors in temperature forecasts were found to be a factor in AEMO underestimating the operational demand.^{15 16}

New South Wales

On 10 February, parts of New South Wales reached 42°C with peak demand reaching 14,181 MW at 4:30 PM. This peak was likely lower than it could have been, due to a New South Wales Government media campaign to encourage reduced electricity consumption.

A combination of issues led to New South Wales’ power system not being in a secure operating state:

Wind generation was below forecast, and solar photovoltaic generation was declining in the late afternoon.

Some thermal generators were operating at reduced capacity due to high temperatures.

One gas-fired generator had a forced outage due to a technical fault, and another gas-fired generator was unable to start due to low gas pressure in the fuel supply lines.

As a result, the three interconnectors supplying New South Wales breached their operating limits from approximately 4:30 PM. This reliability issue became a security issue due to the overloading of the interconnectors.¹⁷

With all available generation already online, all interconnectors running above full capacity and demand still exceeding supply, as a last resort AEMO directed TransGrid to shed some load at the Tomago Aluminium smelter for a period of approximately an hour (in addition to some load shedding that had already occurred at the smelter, not instructed by AEMO).¹⁸ This action helped to restore the power system to a secure operating state.