Rooftop solar 'juggernaut' risks grid overload as AEMO issues rare low-demand warning

Rooftop solar output has reached such enormous levels that authorities have begun issuing warnings about their ability to keep the electricity system from being overloaded at times.

In an extraordinary move this week, the body that runs Australia's biggest energy market said the supply of solar power in Victoria threatened to overwhelm demand for electricity from the grid amid mild, sunny conditions.

It said Friday's oversupply of solar was so acute that demand for power from the grid would fall below a threshold critical for keeping the electricity system on an even keel.

Such warnings have only been issued a handful of times before.

The Australian Energy Market Operator (AEMO) issued the warning — known as a minimum system load notice — as it outlined the emergency steps it might need to take to ensure the system was kept stable.

Among these were switching off — or "curtailing" — rooftop solar systems to ease pressure on the grid or directing energy users to keep demand artificially high to soak up excess generation.

AEMO signalled it could also force transmission lines taken out of service for maintenance to come back online to act as a relief valve for surplus Victorian solar power.

It followed reports the agency had put on notice the owners of big batteries, which might be required to stand by on empty to ensure as much excess solar as possible could be stored.

"AEMO has detected that there is an elevated risk of insufficient demand to maintain a secure operating state in the Victorian region," the agency said in the notice.

A juggernaut with no leash

Demand for grid-based power in Victoria was forecast to fall to 1,800 megawatts on Friday – below the minimum threshold of 1,865MW.

Grid demand is usually about 5,000MW in Victoria, while peak demand is about 10,000MW.

The remarkable intervention from the market operator is the latest sign of the growing power of rooftop solar, which is quickly becoming one of the most potent forces in the electricity system.

About 3 million households – or one in three – currently have a solar system on their roof across the national electricity market (NEM), which services Australia's eastern seaboard.

Collectively, those solar panels are the biggest single source of power in the country, with a cumulative capacity of more than 20 gigawatts.

Energy software company Gridcog said rooftop solar was a "juggernaut" that was redefining the electricity market and testing the technical limits of the grid.

In a post on social media, the company said the growing output from solar panels was forcing demand for power from the grid ever lower at certain times.

These times were most acute on mild, sunny days when households and businesses were using relatively modest amounts of electricity but solar generation was at its most productive.

In such circumstances, the company said, rooftop solar was posing a challenge to the stability of the grid.

This was because rooftop solar was not only meeting its owners' demands but, increasingly, the demands of other users as surplus output flowed into the system in a more or less uncontrolled way and displaced other types of generation.

When demand, not supply, is short

And it said the phenomenon was turning on its head people's conceptions about what pushed the grid to its limits — namely peak demand in summer when air conditioners pushed supply to the brink.

"The rapid rise of rooftop solar in Australia's NEM has been a renewable juggernaut, lowering energy costs for home owners and reshaping wholesale markets," Gridcog noted.

"As rooftop solar installations have continued apace, [daytime demand for power from the grid] has dropped lower and lower, heading towards a point where the demand on the system will lead to breaches of system security and power instability."

The need for a minimum demand threshold – or floor below which demand for power from the grid should not fall – has become increasingly important in recent years as the level of output from solar has grown ever higher.

According to AEMO, the thresholds are needed to ensure there is enough room for conventional generators such as coal- and gas-fired power plants to operate.

These conventional plants have traditionally provided — and still provide — services critical to the safe and secure operation of the electricity grid.

Such services include inertia, or the physical property that makes it easier to balance a moving bicycle than a stationary one.

Whereas conventional generators provide these services as a by-product of their design — they include huge pieces of spinning metal known as turbines — rooftop solar panels typically do not.

According to AEMO, a lack of plants able to provide "essential system services" puts the security of the system at risk.

"If AEMO cannot source these critical system security services from elsewhere, then it must intervene to keep the grid in a secure operating state," it has noted.

Victoria is not out of the woods yet, either.

Solutions 'urgently needed'

Paul McArdle from analysis firm Watt Clarity said demand for grid-based power in Victoria was forecast to fall to just 1,352 megawatts at about midday on Saturday.

If the forecast held true, he said it would be the lowest-ever "market demand" level the state had seen.

And, he said it risked falling below a more serious threshold, raising the possibility that AEMO would have to take even more drastic action to safeguard the system.

"Leaving aside the jokes about Victorians abandoning the state 'en masse' without a local team to support … it's clear that a major contributor will be the gangbusters rooftop PV pummelling otherwise suppressed long-weekend springtime underlying demand," Mr McArdle wrote on Watt Clarity's website.

With the problem only likely to get more acute, Gridcog said solutions were urgently needed.

However, the company said the market was not up to the task and provided too little incentive for energy users or generators to provide a fix.

It said that if supply was too low, the price for electricity on the spot market could soar to as high as $17,000 a megawatt hour – a huge incentive for generators to enter the market.

By contrast, when demand was too low, it said prices only fell to between negative $45/MWh and zero, meaning consumers were paid comparative peanuts to use more power.

Gridcog indicated reforms to the market would be needed to provide a better incentive to users as the shift towards more rooftop solar continued.

"The purpose of the (minimum demand warning) is both to warn market participants and to seek a market response," Gridcog posted.

"The current notice is only … the least worst, but it's the first of its kind and the broader framework of addressing minimum demand is still being actively developed."