South Australia is now coal-free, and batteries could fill the energy gap

South Australia’s last coal-fired power station closed on Monday this week, leaving the state with only gas and wind power generators.

The Northern Power Station, in Port Augusta on the northern end of the Spencer Gulf, has joined Playford B – the state’s other coal-fired power station which has already been retired.

The coal mine at Leigh Creek that supplied brown coal to the power stations also closed earlier this year, so there is no easy option for re-opening the power stations.

The immediate impact of the closure was a brief wobble in wholesale electricity prices, with more energy brought in from Victoria’s brown coal power stations (adding to carbon emissions).

But how could it affect the state in the long term?

Could South Australia run out of power?

Average electricity demand in South Australia is 1.4 gigawatts, and the state record for peak demand of 3.4 gigawatts was set in January 2011. In the past two years the highest demand was 2.9 gigawatts.

Rollout of rooftop solar panels is one of the reasons demand from the grid has been going down. The impact on the peak demand – the time of day when most people are using appliances – is less clear, because if the peak occurs after sunset, solar panels will not reduce it.

With the closure of the 520 megawatt Northern Power Station, South Australia is left with 2,800 MW of capacity in its gas-fired generators, which can be fired up when needed, and 1,500 MW of wind farms, which of course produce energy only when the wind blows. Most gas generation capacity comes from the Torrens Island A (480 MW) and B (800 MW) installations, built in the 1960s and 1970s, respectively.

There have been discussions about retiring Torrens Island A (it was mothballed for a period in 2014), but the departure of Northern appears to have delayed those plans.

The state also has a total of about 600 MW of rooftop solar, but, as noted above, this technically counts as reducing demand rather than adding to supply.

South Australia is also connected to Victoria via two transmission lines, one at Heywood (recently upgraded to 650 MW) and one at Murray Link (220 MW). This gives the state access to a potential 870 MW of Victorian power.

If South Australia gets close to record demand, the state clearly outstrips the capacity of the local gas generators. If the wind isn’t blowing, then the state will depend on the interconnectors.

But there is an unfortunate factor that transmission lines tend to fail under very high temperatures, which correspond to the times of highest demand.

It may sound unlikely, but South Australia is at risk of failing to meet demand. This would depend on a very specific set of circumstances:

A role for storage

This situation means the state is the most likely location for investment in storage. The Australian Renewable Energy Agency (ARENA) recently published a report on storage that identified several locations in South Australia that would be logical places to install commercial-scale batteries.

We at the Melbourne Energy Institute have previously written about pumped hydro storage options, in particular the novel approach of using salt water. This may be of particular use in a very dry state such as South Australia.

But batteries are only going to be attractive investments if there is sufficient volatility in the market to provide arbitrage opportunities. Arbitrage, put simply, is the process of buying low and selling high.

Storage systems need be able to be charged with low-cost energy (for instance, overnight when demand is low, or when the wind is blowing hard) and dispatch the power back onto the grid at a sufficient profit to cover the investment costs.

We are currently in a low-demand period of the year (the shoulder seasons have both low heating and cooling requirements). This means there has not been much shift in electricity prices coming out of South Australia with the removal of Northern. It might not be until next summer, with hot temperatures and increased demand from air conditioners, that we are able to see the true magnitude of the impact of this exit on electricity prices and market volatility.

To date (only a couple of days since the closure), the wind has been blowing hard and there has been no need to increase substantially the generation from other fossil generators. Likewise, there have been no discernible shifts in the spot market prices.

Finally, the impact on carbon emissions will also be interesting. This will depend on how the remaining generators respond. The gap left by Northern may be filled with South Australian gas, in which case total emissions will fall, but more likely the gap will be filled with Victorian coal power via the interconnectors, resulting in no reduction in net emissions.

We will know the net result in due course – watch this space.