FUTURE POWER - POWER GENERATION,

TRANSMISSION & DISTRIBUTION IN THE

YEAR 2050 IN Australia

OKONKWO CHUKWUMA UZOMA

18871034
A research report submitted for

300197: Power Systems Planning & Economics

In partial fulfilment of the requirements for the degree of

Master of Engineering
Electrical electronics engineering (power)

Lecturer: Prof. Keith Mitchel

School of Computing, Engineering and Mathematics

Western Sydney University

August 2018

Summary
Economic growth is an essential requirement because it funds our improving living standards and
social development. This has been fuelled by increasing energy supply. Consistent with global
trends, Australia’s energy consumption has been increasing steadily. Total primary energy
consumption is projected to grow by nearly 42 per cent (or 1 per cent a year) over the projection
period. This compares with the average annual growth in primary energy consumption in Australia
of 1.5 per cent a year from 2001-02 to 2011-2. Electricity supply in Australia is fast approaching
a juncture due to traditional fossil fuel power stations coming to the end of their economic lives,
increased market pressure from renewable energies and community expectation regarding the
need to address climate change. it is estimated that by 2050, customers or their agents - not
utilities - will determine how over $200 billion in system expenditure is spent and millions of
customer owned generators will supply 30-45% of Australia’s electricity needs. Due to the
declining cost of renewable generation (mostly wind and solar) over the projection period as
shown in the latest BREE’s Australian Energy Technology Assessment (BREE 2013a), electricity
production from renewables is expected to grow by 1.5 per cent a year, with wind and solar
growing at a rate of 2 and 3 per cent respectively over the projection period. Renewable electricity
generation options including solar PV and wind generation are already influencing the electricity
market, and other options are continuing to develop such as solar-thermal, hydro, geothermal,
bio-mass, waste gas and wave and tidal energy. Solar PV is the most influential renewable energy
to which consumers have direct access and wind energy is currently the lowest cost, low emission,
technology which can be rolled out on a large scale. The emergence of battery storage options
and greater use of pump storage will become more prevalent in the next couple decades as
technology development improves, opening up the possibility to transition from reliance on
centralized electricity generation to distributed energy generation and storage by 2050. There are
also other wide reaching policy approaches that could influence the electricity market, and help
to reduce emissions. Energy efficiency policies can be implemented with immediate effect, with
the potential to effectively reduce emissions.
Introduction
Australia is endowed with abundant, high quality and diverse energy resources and has 34% of
the world’s uranium resources, 14% of the world’s black coal resources, and almost 2% of world
gas resources. Australia has only a small proportion of world resources of crude oil. Australia also
has large, widely distributed wind, solar, geothermal, hydroelectricity, ocean energy and
bioenergy resources. Gas resources rank as Australia's third largest energy resource, supporting
domestic consumption and a growing export market. Australia has limited crude oil resources and
is increasingly reliant on imports for its transportation. Australia is endowed with renewable energy
resources (wind, solar, geothermal, ocean and bioenergy). Wind and solar energy resources are
being increasingly exploited, while geothermal and ocean energy remain largely undeveloped.
Overall, it is expected that domestic and international demand for Australia's energy resources
will continue to rise over the next few decades; however, the rate of this growth is expected to
slow, and the types of energy used are likely to change as new technologies become more
competitive. In the coming decade, Australia will need to reconsider its energy supply mix as a
number of large capacity fossil fuel power stations reach the end of their economic lives, and
Australia’s post Paris COP21 commitments need to be addressed. To overcome the potential loss
of a large amount of generation from the grid, and to meet emission targets, Australia will need to
further diversify its energy supply and look at increasing low emission options A wide array of
adaptation options is available, but more extensive adaptation than is currently occurring is
required to reduce vulnerability to climate change. There is high agreement and much evidence
that all stabilization levels assessed can be achieved by deployment of a portfolio of technologies
that are either currently available or expected to be commercialized in coming decades, assuming
appropriate and effective incentives are in place for their development, acquisition, deployment
and diffusion and addressing related barriers. All assessed stabilization scenario indicate that 60
to 80% of the reductions would need to come from energy supply and use, and industrial
processes, with energy efficiency playing a key role in many scenarios. The impact upon the
climate caused by our current energy use cannot be sustained as Fossil Fuel accounts for 73%
of Electricity Generation in Australia (Energy and Australia, 2018). However, replacing the current
energy generation regime with a model based upon renewable technologies will not be easy as
the factors limiting the uptake of renewables remain technical, not political. We must have a
rational science-based pathway to overcome those hurdles. To prepare for the required change
in the energy sector, a national transition plan is essential to provide a clear direction for the
nation, provide certainty for investors and consumers, and reduce risk and unnecessary costs to
the energy sector. Government policy intervention, clearly laid out through a national transition
plan, has the ability to shape the future of Australian electricity generation, considering all options
which can help meet emission reduction targets. Without a clear plan, Australia risks losing a
large portion of its generating capacity in a short period without any alternatives in place, while at
the same time undermining its Paris COP21 commitments. Reliability and resilience of supply,
transmission and distributions of an interconnected electricity grid needs to be considered in any
transition plan.

Fig 1: Electricity generation across Australia

Decentralized Energy Systems – Micro grids: Bottom-Up Perspective:

Microgrids are a type of decentralized energy system that transmit power from interconnected
local Distributed Energy Resources (DER) over low or medium-voltage distribution networks, and
can function in a manner that is completely isolated from the centralized grid. The successful
integration of a distributed energy system into a larger centralized grid, enables the distributed
energy system support typically in the form of ancillary services, load shedding, consumption
resources and reliable dispatchable DER. Given that the microgrid introduces on- site generation,
bidirectional power flow as well as storage, it can be seen as a valuable resource to the grid. The
enabled participation in demand-response programs can lead to reduction of load when the strain
on the grid is high, as well as the possibility of exporting power to the grid to maintain stability.
Further, the self-sustaining character of the microgrid can enable it to work as its own entity if it
needs to be load-shed from the grid. Other examples of ancillary services provided by the
microgrid to the centralized grid include reactive power power/voltage control and active loss
balancing. A microgrid could also be used as a primary reserve for the centralized grid as
described in (Tjäder, 2018). 55% of future connections by 2050 are expected to take place outside
of the centralized grid. It is highly likely that this will lead to some situations where the centralized
grid will reach the area of the microgrid. Situations will more commonly occur where the
centralized grid and microgrids are co-existing. This can lead to several outcomes, ranging from
the microgrid providing services to the centralized grid, to providing customer back up service and
distributing the electricity locally to abandonment of the microgrid equipment (such as for example
solar panels, inverters or other components in the microgrids). Decentralized grids do not need
to be considered as “competing” with the centralized grid in seeking solutions for electrification.
Instead, a microgrid can be seen as a building block in creating an electric grid that is “smart” (see
Figure 2). Several approaches have been suggested for connecting microgrids and building the
grid from “the bottom-up”. The microgrid can then be considered a “cell” in a matrix of
interconnected nodes such as DER and customer loads. In this context, control is based on the
interaction between the microgrid operator and the distribution utility; and the system created
enables the microgrid to support the centralized grid, and vice-versa. Depending on the hosting
capacity of the centralized grid, microgrids can be seen as both a way to achieve end-of-the-line
grid strengthening and as a way to avoid load shedding when the centralized grid is strained. A
further benefit of microgrids is the speed of construction (weeks to months), whereas it takes
several years before the centralized grid is extended. Absolute capital investment per kilometer
of central grid extension may also be higher than a microgrid system designed to serve a
community autonomously. Even though the benefits are clear, micro grids can sometimes be
considered to be inferior to a reliable centralized grid given that energy access is not always
unlimited (Tjäder, 2018).

Figure 2: Distributed Energy systems integrated in a larger grid

Impediments to achieving a modern network
Historically power flowed via power transformers from high voltage to low voltage. We are now at
a point where we are adapting this grid to accommodate two-way energy flows which can be done
with sections of low voltage, but the original grid was not designed to operate this way. Some
technologies are already having significant impact on the electricity grid, such as solar
photovoltaic systems (solar PV), and although it may still be decades before the role of other new
technologies is fully realized, energy policy strategies planning for the short to long-term need to
be implemented. There needs to be a more holistic approach to the role of new technologies. Not
only will new technologies for distribution and transmission play a key role in modernizing the grid,
but also new generation technologies will change the system. Technologies need to be viewed
together from generation to transmission, distribution and the end user and coupled with smart
technology for optimal grid use. The concerns of consumers must be at the forefront in
establishing policy for modernizing Australia’s electricity grid. It is noted that much of the
significant price increases of the past decade can be attributed to the network sector, where in
some jurisdictions network charges comprise half the customer’s end bill. Furthermore, distortions
in market pricing through manipulation of pricing and gaming by participants in the National
Electricity Market (NEM) need to be structurally addressed.

Renewable technologies
Firstly, there are increases in renewable electricity generation options which are already in
commercial use, or are in the development phase. This includes solar PV, solar thermal plants,
wind, hydro, geothermal, bio-mass, waste gas and ocean wave and tidal energy. Currently rooftop
PV is the most influential renewable energy generation to which consumers have direct access.
Deployment of distributed solar PV has been rapid, with more than 1.5 million distributed solar
PV systems now installed across the country60. Additionally, residential and commercial uptake
of rooftop PV is expected to increase in the coming decades, adding to the projected reduced
electricity consumption from the market. If the right policies are introduced it is expected that
consumers using rooftop solar panels and batteries will produce between 30 to 50 per cent of
Australia’s electricity needs by 2050. Large-scale solar PV (defined as greater than 5MW) remains
in its infancy however 12 new projects were announced at the end of 2016 with 482 MW (AC)
capacity costing over $1 billion. Wind power generation is currently the lowest cost, low emissions
technology available that can be rolled out on a large scale. In 2015 Australia’s 76 wind farms
generated a combined capacity of 4187 MW. Industry observers are expecting to see
advancements in the industry, with taller tower for access to greater wind speeds, larger rotators
for lower wind locations, and improved reliability and efficiency to reduce cost. Energy storage
holds great potential to benefit the electricity system, and has the potential to solve challenges
such as smoothing intermittency of renewable generation and managing peak demand. By
connecting millions of customer owned generators and storage systems to each other, they can
act as networks which help to match supply and demand.

Transmission and Distribution

The electricity distribution networks were traditionally designed for one-way power flow to
customers. With the proliferation of new technologies within customer’s premises, such as rooftop
PV, distribution network operators are seeing reverse power flowing back into the grid. With this
brings technical challenges that need to be managed such as quality of supply and voltage
regulation. But as emission reduction targets need to be met and more renewable energy sources
are connected to the market, the networks designed for transporting energy from centralized coal
generation centers will need to change to support generation in new areas where wind and solar
resources are high. To ensure the security and reliability of the NEM, innovative solutions must
be found to enable this integration and allow effective management of both the transmission and
distribution systems. The transmission network will also play a key role in ensuring that power
system security can be retained in a system with lower levels of inertia. Similarly, technical
solutions at the distribution level will be required such as “smart” PV inverters. There will need to
be a change in the traditional planning, control and operation strategies as well as development
in forecasting and control techniques that provides the market operator with timely information.

Conclusion

Engineers Australia believes that it is time for a transition plan to be developed which looks at the
best options for consumers, the economy and the environment. This transition must reduce
uncertainty and send the right signals to potential investors. Delaying a shift away from aging
fossil fuel plants to low carbon options increases the likely risks and costs of a transition in the
electricity sector, as it can take decades to plan, permit, finance and build new power
infrastructure92. Given the long term nature of conventional electricity investments, investment
decisions in baseload generating capacity are usually made on the basis of long-term
fundamentals rather than short term behaviour. If there is ambiguity in policies that will influence
Australia’s future electricity generation options, it can create uncertainty for investors.
Government policy intervention, clearly laid out through a national transition plan, has the ability
to shape the future of Australian electricity generation. While government tone about the
importance of a transition to help tackle climate change has recently become more positive, real
action, and a real transition plan, are still missing from the national discourse. Doing nothing is
not an option if Australia is going to follow through with the commitment to Paris targets.
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