Rooftop solar installations have continued record growth in 2020, as reported by Clean Energy Regulator (CER) in its latest December Quarterly Carbon Market Reports. In the report, 3GW of rooftop solar capacity was installed in 2020, which is a year-on-year increase of 40%. This brings the total rooftop solar capacity to 13 GW by the end of 2020. With the increase in rooftop solar installations, the impact of over-generation in the middle of the day and ramping down during evening peak are now more pronounced, as seen in the state of South Australia, which has the highest share of non-dispatchable renewables.
In this ‘Chart of the week’, we examine the time-of-day average rooftop solar generation and the time-of-day average NEM price for the first quarter to-date of the year for the state of South Australia. Comparing with the first quarter of the past two years, we provide commentary on the impact of the rooftop solar generation on the wholesale price.
As shown in Figure 1, due to the growth of rooftop solar and larger systems installations, we can see the increase of the rooftop solar generation over the years. Comparing with Q1 of 2020, the average rooftop solar generation in the middle peak of the day has increased by 26.2%. This accounts for 52.9% of the demand.
This increase has a huge impact on the quarterly average price in Q1 2021, we now observe negative quarterly average price over the whole middle of the day (10am – 3:30pm, 12 trading periods). For comparison, in Q4 of 2020, when we first observe negative quarterly price in SA, only 5 trading periods.
This has resulted in an increased chance of over-generation, which occurred on 14 March 2021, when AEMO instructed South Australia’s transmission owner and operator, ElectraNet to ‘switch off’ 50MW of rooftop solar and 17MW of grid solar. According to AEMO, this is to secure demand above 400MW threshold to prevent the risk of islanding.
As can be seen from the chart the wholesale price will increase, as gas generators ramps up to fill in the gaps. During these periods, wind helps to keep the prices in check. However, if wind does not blow, it would further exacerbate the strains, putting upward pressure on the prices.
This chart of the week highlights the market price signal for investment in large flexible loads in South Australian and is likely to be favourable for the recently announced hydrogen production facilities in the SA labor plan. The new potential hydrogen facilities could add 250MW to minimum demand strengthening the grid. This facility could also ramp down during the peak price periods while adding 200MW of firm renewable generation through hydrogen powered turbines.
If you are interested in hydrogen as a solution or want to better understand the impacts hydrogen investment could have on the market, then please join us for our upcoming ‘Australian hydrogen forums’ as we offer a comprehensive overview of the opportunities and challenges brought by the hydrogen economy.