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Australia is installing solar and wind three times faster per capita than the USA. How is it coping?
The Australian National Electricity Market (NEM) serves 20 million people along the eastern seaboard and has annual demand of ~200 TWh. Traditionally, coal generated most of the electricity supplemented with hydro (~7%) and gas (~13%). It is physically isolated and cannot exchange electricity with any neighbouring grid.
This is changing fast. In the month of September 2021, renewables (mostly solar & wind) provided 36% of generation. During daytime hours, the renewable fraction often exceeded 50% for many consecutive hours, and passed 60% on several occasions. Fossil gas generated 5%. Average wholesale spot market electricity price was US$30/MWh.
Renewables are tracking towards 50% of total generation in 2025. The graph shows 6-month moving average generation shares of coal, gas and renewables. The shaded region is a linear projection of current trends for the next year.
For comparison, California had annual generation of 273 TWh in 2020, of which 40% came from gas and coal, 35% from other dispatchable sources (hydro, nuclear, geothermal, bio) and 25% from solar & wind. About 30% of California’s electricity was imported. California has vast off-river pumped hydro energy storage potential.
Balancing variable solar and wind in Australia is relatively challenging because dispatchable non-fossil generation amounts to only ~8% (hydro + bio) and because of the absence of connections to neighbouring grids. However, grid managers are learning to cope with the rapid rise of solar & wind.
Balancing is being provided by way of hydro, pumped hydro, batteries, demand management and load-following legacy coal and gas plant. Stronger interstate transmission also helps by smoothing out local weather and demand. Three existing pumped hydro systems will soon be joined by two more (2.3 GW, 350 GWh) presently under construction and another dozen are under consideration. Several GW of batteries are being deployed, and many more GW of utility, home and EV batteries are in the offing.
Australia is a global pathfinder for rapid deployment of solar and wind.
Key messages from the Australian experience are that there are plenty of off-the-shelf solutions that provide both grid stability and low electricity prices.
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