Today's weather in Victoria and South Australia is a timely reminder of how critical infrastructure works: you don’t realise it’s there until it’s not. The supply demand balance in the National Electricity Market (NEM), and particularly in Victoria and SA is finely balanced at the moment after the progressive withdrawal of several large thermal power stations over the past 5 or so years culminating in the shutdown of the Hazelwood brown coal station. The withdrawals were all economic decisions in a market that was in fact oversupplied. The deregulation and partial privatisation of generation as led to this being a set of economically rational decisions and a sign of the market working well, outages not withstanding. Todays outages are unfortunate for those of us who experienced them, but are in fact completely in line with the way power grids have been designed and operated for the last 100+ years. Outages are expected and in fact designed into the system according to a carefully considered formula trading cost versus reliability. A 100% reliably systems would be unaffordable in any country!

The NEM has a “reliability standard” of 0.002% unserved energy which is roughly equivalent to a loss in any given year of supply to 36,000 customers for an entire 24 hours, or 88,000 customer for 10 hours. What happened today is well within this target at this stage. Unless this happens 12 times or more in 2019 the system will have met its reliability goal. This is highly unlikely given that today we had an extreme situation with record high temperatures in two states and several fossil stations on unplanned outage.

This is a well known phenomenon to those of us who have worked in the market in companies operating coal and gas stations since its early days. In Queensland in 1998-2001 we experienced regular outages before additional generation came online and the Queensland-NSW interconnection came online. At the current point in time the needs of the system are well matched with AEMO’s ability to manage it and they have been doing an admirable job. Of course once significantly higher penetration of renewable starts to manifest, that is when they grow to well about 50% across the NEM, additional measure such as use of centralised and distributed energy storage and urban microgrid/smart grid based demand management will be essential, but we are well on track for that.

In extreme demand situations such as hit Victoria today there are two aspects that can lead to load shedding:

1. Overall if the load is getting close to the available generation , emergency contributions from smelters reducing the load can help as well as calling on emergency generation. But if the load still exceeds generation, load shedding is the only final solution.
2. If the load is high some local transformers in the distribution system may exceed their rating as they get so hot they need to be tripped. In this case certain local loads will be shed while others continue independently.

The Victorian case seems to have both components present as some local loads are shed, emergency load reductions are called upon and more high price generation is called upon. Even with these impacts the load is still exceeding generation and certain areas are selected to be shed. These areas could be cycled such that no one load is selected for the full day.

Renewables: Typically solar power would be strong in the middle of the day and reduce the problem of mismatch. There is some reduction of output as the cells themselves operate at a higher temperature but this is minor.

Batteries:  Where batteries are available they can help generation but there is usually a finite amount to energy to make a big difference over the full period of excessive load.

Electricity is an essential service and the Victorian electricity system today is suffering under the hefty weight of a floundering Australian energy policy. As the suburbs of Melbourne are switched off, many ask why us? The truth is, it’s not personal it will safeguard the rest of the grid from system-wide blackouts and potentially avoid catastrophe. But the reason why power shedding has happened in the first place isn’t because of Hazelwood’s retirement or the variability of renewables. The blame can be squarely put onto the vacuum that surrounds climate and energy policy. Climate change will continue to create periods of extreme temperatures and increase the likelihood of bushfires. Thus, our electricity system will be unable to cope with having to provide an essential service during periods of extreme weather, it will only accelerate the problems of climate change.

The Australian National Electricity Market has ridden through many storms that will only get worse if we continue to rely on coal and fail to invest in new infrastructure. The problems that we see today and those of 2016 in South Australia and Tasmania, will continue if we don’t invest in new electricity transmission infrastructure between all the states; further deploy renewables and storage; improve energy efficiency and integrate demand side management of large electricity consumers.

The combination of extreme heat wave conditions, and the unavailability, because of breakdowns and essential maintenance, of a substantial fraction of the state’s coal-fired generation capacity, is placing the electricity supply system in Victoria under severe stress. As a result, AEMO has had to resort to its last option to keep the system safe and secure, which is to reduce demand for electricity by what is technically called load shedding. What this means is rolling blackouts in selected areas. These are likely to be imposed in areas where the transmission and distribution system is under most stress. Yesterday, quite separately from the problem of insufficient generation, there were unplanned blackouts because some parts of the distribution system were unable to cope with the heat.

These events should be a wake-up call to the electricity supply industry in Victoria to put much more effort into encouraging their customers in demand response. This means paying consumers to allow the supply authorities to turn off their air conditioners compressors (not the fans) and pool pumps for short periods on a rotating basis, to reduce overall demand. Compared with building new thermal generation capacity, which may be needed for only a few hours per year, and never in some years (and would still be prone to heat stress breakdowns), this is a much lower cost way of avoiding the need for load shedding.

Prompted by the State Government, which still owns the state’s transmission and distribution businesses, Queensland has led the way in implementing demand response in Australia. AEMO has been strongly encouraging greater uptake of demand response, but its powers are limited. The State Government, not to mention the Commonwealth, should be getting strongly behind these efforts.