Rising Green Energy in a Grid: Lessons From Australia

Green energy is poised to dominate power grids globally, but several challenges must be addressed to achieve its full potential. Australia’s solar expansion serves as a prime example of effective solar power integration into an energy mix.

Australia now boasts 25 GW of rooftop solar capacity across four million installations. Across the National Electricity Market (NEM), which covers Australia’s eastern seaboard, nearly 3 million households – about one in three – have rooftop solar systems. Together, these systems form the largest single source of power in the country, with a combined capacity exceeding 20 gigawatts.

Solar energy has grown at an average annual rate of 27% over the past decade, contributing 45% of the renewable energy generation in 2022–23. However, this surge has also led to declining grid-based demand during sunny periods, threatening system stability as energy surplus sometimes overwhelms grid capacity. To address these challenges, Australia is adopting measures to mitigate the impact of this new change. For instance, the Australian Energy Market Operator (AEMO) has implemented measures such as curtailing solar inputs and managing transmission lines strategically to maintain balance​.

Minimum Load Problem of Australia

The Minimum Load Problem has long affected Australia’s power systems and markets. Recently, AEMO issued a minimum system load notice, warning that solar power supply in Victoria risked overwhelming electricity demand amid mild, sunny conditions.

AEMO highlighted that the solar oversupply was so significant that demand for grid power could drop below the critical threshold needed to maintain system stability. This issue is driven by the increasing output from rooftop solar panels, which pushes grid demand to extremely low levels during mild, sunny days. These are times when households and businesses consume less electricity, yet solar generation is at its peak.

Rooftop solar not only meets the electricity needs of its owners but also contributes surplus energy to the grid in an uncontrolled manner, displacing other forms of generation. This surplus challenges the stability of the electricity system. 

On the day of the notice, grid demand in Victoria was forecast to drop to 1,800 megawatts, below the minimum threshold of 1,865 MW. For comparison, typical grid demand in Victoria averages around 5,000 MW, with peak demand reaching about 10,000 MW.

The rapid growth of rooftop solar installations has steadily reduced daytime grid power demand, approaching levels that could compromise system security and lead to 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. This is to ensure that there is enough room for conventional generators such as coal- and gas-fired power plants to operate.

Mitigation

To address the issue, AEMO proposed emergency measures to maintain system stability. This intervention highlights the increasing influence of rooftop solar, which is rapidly becoming a significant force in the electricity system.

One measure involved curtailing rooftop solar systems to reduce grid pressure. Alternatively, AEMO could direct energy users to maintain higher-than-normal demand to absorb surplus generation. Another option included bringing transmission lines, previously offline for maintenance, back into service to act as a relief valve for excess solar power in Victoria.

Rising Energy Storage

Energy storage has become indispensable in supporting the growth of solar energy, addressing the challenges of variable solar and wind power generation. Technological advancements, government incentives, and heightened market competition have collectively driven down storage costs, making these solutions more accessible.

Australia stands out as a leader in energy storage integration, following its widespread adoption of rooftop solar. In the first half of 2024, 20.7% of rooftop solar installations included small-scale batteries, a significant increase from previous years. The battery attachment rate for solar households rose to 19%, reflecting a 5% growth compared to the same period in 2023. These systems are vital for stabilising solar energy generation and ensuring a consistent supply​.

AEMO has also prioritised grid-connected battery energy storage systems (BESS) to manage record levels of rooftop solar generation. These batteries are intended to absorb excess energy and maintain minimum operating levels for conventional power sources like coal and gas​

Additionally, the Federal Government’s Community Batteries Funding Program, with $120 million allocated through the Australian Renewable Energy Agency (ARENA), has garnered significant interest, receiving applications exceeding available funds by more than tenfold. Beyond small-scale storage, large-scale battery investments have surged, with 2023 marking a record year for such projects. By year’s end, 27 large-scale battery storage projects were under construction, up from 19 in 2022.

Other Solutions

Australia is at the forefront of innovative energy solutions, exploring microgrids that integrate solar, wind, and emerging technologies like hydrogen fuel cells. The Denham Renewable Hydrogen Microgrid in Western Australia highlights the feasibility of incorporating renewable hydrogen into energy systems, despite challenges such as intermittencies and technical limitations. Advanced storage solutions like batteries play a crucial role in addressing these issues and ensuring a consistent power supply.

These advancements are equipping Australia to address grid challenges arising from renewable energy adoption. The country’s rapid progress offers valuable lessons for maintaining grid stability while scaling renewable energy solutions, providing a model for other nations to follow.