A lot of the discussion around the “uncertainty” of Australia’s future energy needs stems from the uncertainty and complexity of its transition from coal fired power stations to renewable energy. So far, major price and supply disruptions have mostly been avoided while over 80% of Australia’s electricity is still generated by synchronous, dispatchable fossil fuels (60% coal, 19% gas, 2% oil in 2018). Currently, variable solar and wind is effectively firmed by fossil fuel generation across the national market.
However, this will change rapidly over the upcoming decades. The closure of each major coal power station will cumulatively cause a massive shortfall in dispatchable capacity that takes many years of construction and enormous investment to replace. Shut downs could be sudden. Hazelwood Power Station in the Latrobe Valley, which was producing 5% of Australia’s total electricity demand, closed in 2017, giving just 5 months’ notice.
In the wake of South Australia’s black outs in 2016, the world’s largest battery was built. It has been credited with avoiding major black outs since – and is also thought to be very profitable for its owners. While it can only provide a maximum of 100MW for a few hours, it can respond within seconds to major network disruptions, when prices may spike to hundreds of dollars per MW. While this big battery has shown to be invaluable for avoiding supply and even larger price fluctuations, it is nowhere near the hundreds of MW and multi day duration that will be needed to take the place of the permanent loss of multiple coal fired power stations.
The “uncertainty” around Australia’s future energy needs is not whether large, long duration dispatchable capacity will be needed when coal fired power stations are shut down. The “unknown” is just how soon those power stations will be shut down, making large storage suddenly crucial.
You can find out more about Australia’s energy generation here
Image: Live NEM supply and demand, http://www.nem-watch.info/widgets/reneweconomy/