SA ducks in the news (again); what about the QLD duck?

South Australia is back in the news again with the state achieving a world-first on Sunday, October 11, 2020.

According to a recent update from the Australian Energy Market Operator (AEMO), between 12-1PM, solar power provided 100% of South Australia’s energy demand – a first in Australia and for any major jurisdiction globally.

In this Chart of the Week, via a time-of-day analysis, we:

  • investigate other regions to determine if this phenomenal growth in rooftop solar is only peculiar to South Australia
  • analyse the impact this trend is having on supply in these regions

In Figure 1, we compare the average time-of-day operational demand for FY14 to FY20. As seen in the chart, operational demand in all mainland regions in the NEM have changed substantially from 6 years ago; driven by rooftop solar growth. Interestingly, whilst South Australia gets plenty of coverage due to its minimum demand records, other regions are undergoing much more impactful changes to their demand shape.

In Queensland, for the first time since the commencement of Liquefied Natural Gas (LNG) operations in the state in 2015, the average middle-of-the-day (11AM-1PM) demand is now ~126MW lower than it was in FY14, clearly showing that the (mid-day) output from rooftop solar in the state is now greater than the increased demand from the LNG export industry. However, the situation flips a few hours later with the average demand during the evening peak (6- 8PM) now ~910MW greater in FY20 than in FY14; emphasising the increasing ramp (>1GW) and flexibility requirements in the region. In New South Wales (NSW), we are seeing similar trends with the middle-of-the-day demand down by ~780MW on FY14 levels and like Queensland, the evening peak demand has increased by an average of ~270MW in FY20.

Interestingly, on this metric, SA has seen the lowest flux in time-of-day demand in the mainland (the state also has the lowest overall demand admittedly). Middle-of-the-day demand in South Australia has dropped by an average of

~375MW on FY14 levels; with demand outside these periods (including the morning and evening peaks) holding steady.

In Victoria, operational demand through the day has dropped significantly on FY14 levels, largely driven by industrial closures such as the Point Henry Smelter. However, as in other regions, reduced demand in the middle-of-the-day exceeds the drop seen outside sunshine hours due to rooftop solar growth. So, what does this mean for supply going forward?

Most of the supply impacts from these changes have been seen in thermal generation, especially black coal in recent years. In the last two years output from black coal in Queensland has dropped by an average of 1.1GW between 11AM-1PM. We have seen similar reductions in coal generation in NSW and to a lesser extent Victoria. As rooftop solar continues to play a big role in the NEM’s evolution, increasing flexibility requirements are expected to remain a feature of this two-sided market transition.