"Ecological" power generation is basically nuts. It tries to get something stable out of power sources with wildly fluctuating outputs. Basically, everybody loses. For much of the day both the ecological generators AND the conventional generators lose -- as a big daytime electicity suplus plunges power prices so low that ALL generators get nothing or near nothing for their output
Daytime power prices are plunging into negative territory – meaning generators have to pay to produce – as renewable energy increasingly cannibalises the market, according to experts.
As the share of green energy in Australia's biggest electricity system momentarily reached a record high of 70 per cent this week, energy software company Gridcog said "price cannibalisation" was becoming an increasingly common phenomenon.
Wholesale power prices in the national electricity market across the eastern states dropped to as low as -$64 per megawatt hour last Saturday, when soaring output from millions of rooftop solar panels flooded into the system.
The phenomenon is particularly pronounced in mild, sunny conditions and especially on weekends, when solar output is at its highest but demand for electricity is relatively low.
In a post to its social media followers, Gridcog said large-scale solar farms were, perversely, being hit hardest by the trend because rooftop solar was generally beyond the control of the market operator.
It noted utility-scale solar plants were having to pare back generation or switch off entirely during such periods to avoid having to pay to maintain production.
"Price cannibalisation is a major emerging feature of the energy transition," the company wrote on LinkedIn.
"It occurs when increased volumes of renewables with the same generation profile produce at the same time.
"This depresses prices in the market, often to the point that prices turn negative, and it presents a serious challenge for investors, particularly of utility-scale projects."
The firm said the trend was likely to accelerate as ever-more solar was added to household and business rooftops across the country.
More than 3.3 million Australian homes have solar panels – almost one in three – and there are forecasts this will almost double by 2032.
"These systems compete directly with large utility-scale assets connected to the transmission system," Gridcog wrote.
"As an aside, it also demonstrates the dominance that distributed [rooftop] solar has in Australia compared to utility-scale, something we expect to see more of in other markets in coming years."
Dylan McConnell, a senior research associate from the University of New South Wales, said rooftop solar was no longer a marginal player but central to the running of the grid.
He said the technology was reshaping the power system in sometimes unexpected ways. "It's very significant in some jurisdictions," Dr McConnell said. "It varies across the country, but in places like South Australia there are periods where production from rooftop solar actually exceeds the demand of the entire state. "It's huge."
Dr McConnell said SA was an extreme example of a different, though related, phenomenon known as minimum operational demand.
The term referred to the minimum level of demand for power from the grid.
Crucially, it stripped out the demand that customers were meeting themselves through resources that sat behind the meter — principally, rooftop solar.
Dr McConnell said generation from rooftop solar panels was so great at times that it was not only meeting owners' demands, but also those of most other customers as well.
He said this was pushing demand for power from the grid ever lower and squeezing out conventional generators such as coal- and gas-fired plants.
But Dr McConnell said the electricity system was not ready to run without those generators, which were increasingly having to ramp up and down to cope with the intermittency of solar supply.
"The other day in NSW, [coal generation] was just above two gigawatts in the middle of the day, and then that evening it was above 9GW," he said.
"So we had a 7GW ramp in the space of a few hours — they're capable of doing it.
But then, I guess more importantly, is the impact on economic viability." That, says Dr McConnell, represents the challenge.
"When you have low prices in the middle of the day and low volumes, is the increase in prices in the evening and the higher volumes there enough to offset that? The answer to that seems to be no."
Alex Wonhas, a former electricity system planner, noted that record lows for demand for power from the grid were being broken routinely as more and more rooftop solar was added to the system.
"At times when the renewable resources are high they will replace the conventional generators," Dr Wonhas said.
"But then at other times when the wind isn't blowing and the sun isn't shining we need either storage or conventional generators to step in.
"So it's a much more dynamic and much orchestrated system that we're facing in the future."
For Dr McConnell, the growth of rooftop solar in Australia would continue to test other generators and the power system more broadly.