New blueprint for Australian electricity

19 June 2017

The Australian government is considering the recommendations of an independent review of the country's electricity market. The review, led by Chief Scientist Alan Finkel, has drawn up a blueprint for an electricity system that will deliver future reliability and increased security, while rewarding consumers and lowering emissions.

The review was announced in October 2016, shortly after the state of South Australia suffered a widespread power outage following storm damage to parts of its transmission infrastructure. It included a public consultation process, with over 390 written submissions received and public consultations held in five cities, and over 100 meetings with stakeholders. Its final report - Independent review into the future security of the National Electricity Market: blueprint for the future - was presented to the Council of Australian Governments (COAG) on 9 June.

Australia's National Electricity Market (NEM) is the longest geographically connected power system in the world, supplying the states and territories of eastern and southern Australia - Queensland, New South Wales, the Australian Capital Territory, Victoria, South Australia and Tasmania. It generates around 200 TWh of electricity annually, accounting for around 80% of Australia’s electricity consumption. Three-quarters of the country's electricity is derived from coal. Australia uses no nuclear power, despite being the world's third-ranking producer of uranium, behind Kazakhstan and Canada. All of its uranium production is exported.

The blueprint aims to deliver key benefits of future reliability, increased security, rewarding customers, and lower emissions, underpinned by three pillars of orderly transition measures, system planning and stronger governance.

Under the orderly transition pillar, the review panel concluded that a Clean Energy Target (CET) would be the most effective mechanism to reduce emissions while supporting security and reliability. This would incentivise new low emissions generation while supporting Australia's emissions reduction trajectory, the report says. During the transition, to strengthen security of supply, new generators should be obliged to provide essential services to maintain grid voltage and frequency, as well as being required to guarantee a supply of electricity at a pre-determined level when needed.

"Security and reliability have been compromised by poorly integrated variable renewable electricity generators, including wind and solar. This has coincided with the unplanned withdrawal of older coal and gas-fired generators," the report said. "Security should be strengthened through Security Obligations for new generators, including regionally determined minimum system inertia levels. Similarly, reliability should be reinforced through a Generator Reliability Obligation ... These obligations will require new generators to ensure that they can supply electricity when needed for the duration and capacity determined for each NEM region," it said.

All fuel types would be eligible for the CET scheme provided they meet or are below the emissions intensity threshold.

The report explores nuclear energy as one several "high-potential technologies and projects" which are beyond the scope of the blueprint but may have a place in a future NEM. It notes that for many countries, nuclear power provides a secure, affordable and zero emissions electricity supply, with nuclear plants' synchronous generation supporting power system security. "In Australia, the establishment of nuclear power would require broad community consultation and the development of a social and legal licence. There is a strong awareness of the potential hazards associated with nuclear power plant operation, including the potential for the release of radioactive materials. Any development will require a significant amount of time to overcome social, legal, economic and technical barriers," the report says.

"Our electricity system is entering an era where it must deal with changing priorities and evolving technologies. If the world around us is changing, we have to change with it. More of the same is not an option, we need to aim higher," Finkel said. "If we adopt a strategic approach, we will have fewer local and regional problems, and can ensure that consumers pay the lowest possible prices over the long term."

COAG leaders welcomed the report and asked the COAG Energy Council to provide "urgent advice out of session, and no later than August 2017, on which of the findings can be implemented and a timeline for doing so."

Minister for the Environment and Energy Josh Frydenberg said the Australian government would "carefully consider" the report's findings. "The Turnbull Government's priority is to ensure an affordable and reliable energy system as we honour our international agreements, putting Australian jobs and consumers first," he said.

Researched and written
by World Nuclear News

Filed under: Energy policy, Australia