The myth of baseload power in Australia

Baseload power is a term frequently thrown about in energy discussions but what does it mean and is it really needed?

With the global boom in generation from wind and solar, the argument says there is a need for baseload to keep running in the background to meet demand when the wind stops blowing and the sun goes down.

But is that really the case? For this discussion I’ll focus on Australia. 

The origins of baseload

Baseload power is the minimum level of demand on the grid over a period of time. It has traditionally occurred around 4am.

When the Australian grid was expanded in the 1950s–1970s, the leading option was coal as it offered cheap power and was reliable. There were fewer concerns about emissions or global warming back then.

Coal-fired power stations are designed not to be switched off. They can take days to fire up from cold to full capacity and it’s very uneconomical to shut them off at times of low demand. Australia’s coal plants were therefore sized so they could run continuously, being scaled back to a minimum output overnight and scaled up during the day as demand rose. If the coal plants reached full capacity, then additional generation was brought in as needed from sources such as gas and hydro.

However, there generally wasn’t enough demand overnight to keep the coal plants ticking over, so regulators and operators offered very low-cost electricity for consumers to run their hot water systems in the middle of the night and use up the excess generator power that was available, thereby sustaining the “baseload” on the power stations.

So baseload was also the minimum amount of power the coal plants could supply to the grid without having to be turned off.

And therein lies the problem…

What is happening today?

Coal-fired power stations have served Australia well. As a country with an extensive coal mining industry, keeping domestic demand for coal high has also served the Australian economy well.

Today there is more and more power from variable renewable sources feeding into the grid. On a windy night when wind farms are generating a lot of power at zero marginal cost, the wholesale price of electricity can go negative. Coal plant operators are then effectively paying wholesale consumers to take their power, because that is still preferable to shutting the plant down.

And it goes further. The increasing penetration of rooftop solar on Australian homes is eroding baseload so much that the Australian Energy Market Operator (AEMO) recently forecast minimum demand would no longer occur at night, but during the middle of the day across all Australian regions within the next year or two.

It’s not only the time of day. The level of minimum demand is falling to lower and lower percentages of maximum demand. In South Australia, AEMO expects minimum grid demand to go negative by 2023/24. Let’s put that another way: within five years there will be no baseload in South Australia.

This operating environment is increasingly unsuitable for coal-fired plants that like to maintain a steady output. This, coupled with increasingly severe weather events, is making the cracks appear in Australia’s aging fossil fuel infrastructure.

Australia’s coal and gas power stations had almost 100 breakdowns recorded in the seven-month period to the end of June 2018.

Within a decade, over two thirds of coal plants in Australia's National Electricity Market will be 50 years or older, technically obsolete, unreliable and costly to maintain.

The future

With the progressive erosion of baseload it’s clear that Australia’s future grid will not need large amounts of continuous, constant generation. What is needed is flexibility and reliability of supply and that will most likely be delivered by a combination of renewables, storage and gas.

Combining low cost wind and solar PV with other renewable energy technologies such as solar thermal, hydro and biomass plants can provide round-the-clock or on-demand power as well as meeting technical requirements for grid stability. 

Renewables such as wind and solar are often criticised for being intermittent and unpredictable. That’s partly true, but it doesn’t need to be a problem.

While the output from a single wind farm will fluctuate greatly, the aggregated output from a number of geographically dispersed wind farms will fluctuate much less and be partially predictable. This is because short term and local fluctuations will tend to balance each other out. 

If the wind isn’t blowing anywhere, that’s when other mechanisms come into play.

Source: ARENA - Comparison of Dispatchable Renewable Energy Options

Storage

Adding energy storage such as grid scale batteries, heat storage (from solar thermal plant) and pumped hydro can complement high levels of wind and solar power in the electricity grid by storing excess renewable energy for use later.

Depending on the time frame required for the storage, different mechanisms emerge as the best candidate:

• Short term: battery storage paired with solar PV or wind
• 6-24 hours: pumped hydro or solar thermal.
• Longer term: hydrogen and biomass

Storage is also more flexible and faster to respond than coal and gas plants, enhancing the reliability of the grid. If there is an increase in demand, a coal-fired power station will take hours to meet it, a gas turbine 10 to 20 minutes, pumped hydro anywhere from 20 seconds to two minutes and batteries will take about a second.

Australia already has the world’s largest grid-connected battery (for now) as well as thousands of potential sites for pumped hydro, some of which could be developed as early as 2022.

The real challenge is to supply peaks in demand on calm winter evenings following overcast days. That’s when the peak-load power stations such as hydro and gas turbines can make vital contributions by filling gaps in wind and solar generation. 

Demand side management

Another angle to consider is the demand side. The simple idea behind demand response is that rather than pay to increase how much capacity is available, utilities pay to reduce the amount of electricity consumers use. It’s cheaper and more efficient and particularly useful at peak times.

Managing demand to follow supply may sound unusual but it’s what we’ve been doing for decades in Australia with the overnight hot water tariffs. With electric vehicles expected to proliferate in the coming years, managing when EVs are charged will be an important way to balance the load on the grid.

The importance of transmission

Transmission and a suitably interconnected grid is also key to managing the variable output from these diverse sources.

In Australia we have a long, thin grid that is predominantly comprised of overhead power lines and is therefore susceptible to extreme weather events such as bushfires, storms and floods where there is inadequate interconnection.

AEMO’s 2018 Integrated System Plan called for immediate investment in transmission and highlighted that “an interconnected energy highway would provide better use of resources across the NEM, through both access to lower-cost resources and realising the benefits of diversity from different resources in different locations with different generation profiles”.

Conclusions

In future, "baseload generation" will no longer be synonymous with coal; it will be a term people use to describe any sort of reliable power that meets our minimum needs.

As more variable renewable energy is fed into networks around the world, it is creating an operating environment in which it is more challenging for conventional generators to remain viable, especially those with little or no flexibility to ramp up and down.

Australia is ready to switch to a modern grid, predominantly powered by renewables and storage. The only thing stopping this is political will.

See how SAP is working with utilities to help ensure access to clean, affordable and reliable energy for all.