South Australia Nears 100% Renewable Target, Faces Heatwave Challenges
South Australia is making significant progress towards its legislated goal of 100% net renewable energy, having reached nearly 75% in net terms over the past year. The state has invested heavily in renewable infrastructure, positioning itself as a key player in global renewable energy integration. However, a recent heatwave exposed challenges related to electricity prices and the current limitations of battery storage capacity during periods of high demand.
Renewable Energy Transition and Targets
South Australia has a legislated target of 100% net renewable energy by 2027, representing a substantial increase from approximately 1% two decades ago. The International Energy Agency has recognized South Australia for its integration of renewable energy. Energy Minister Tom Koutsantonis has expressed confidence in achieving the 2027 target, citing approximately $20 billion worth of approved renewable energy projects.
The state has achieved notable renewable energy milestones, including a record week of 100% net renewable energy consumption and 289 days last year where renewables met the state's entire demand for part of the day.
Over the past year, net 73.5% of the state's energy use was sourced from renewables, with overall renewable sources contributing 75.3%.
Wind turbines accounted for 46% of this supply, while solar contributed 27.6%, with rooftop installations comprising 22.3%.
Historical Developments and Grid Stability
In 2002, South Australia's electricity supply was entirely dependent on fossil fuels. By 2016, renewable resources contributed 48%. A major blackout in 2016, caused by extreme weather, led to widespread power disruptions. Subsequent investigations concluded that renewable energy was not the cause, which prompted a focus on enhancing grid stability.
Following this event, a 100MW battery installed by Tesla, known as the Hornsdale Power Reserve, became operational within 100 days. This battery, which was then the world's largest, contributed to improved grid stability and became financially self-sufficient within two years.
Recent Grid Performance and Challenges
South Australia recently experienced elevated wholesale electricity prices, coinciding with a heatwave and record high temperatures in Adelaide. Wholesale electricity prices reached or neared the market cap of over $20,000 per megawatt-hour for more than three hours during the evening. Energy analyst Allan O'Neil reported this as the third most expensive day since the National Electricity Market's inception, with an average price of $2,457 per megawatt-hour over 24 hours.
During this period, the state's fleet of large batteries, while growing, demonstrated insufficient capacity to significantly address the evening demand.
Batteries were largely depleted of their charge by approximately 8:30 PM, which then shifted market pricing power to operators of fossil fuel generators.
O'Neil noted that South Australia's existing battery fleet has an average storage capacity of less than 1.5 hours, making them susceptible to extended price spikes. Data from Watt Clarity indicated that the two largest batteries, Torrens Island and Blyth, reached near-zero available capacity around 8:40 PM and 8:45 PM. While the discharge of batteries between 6 PM and 9 PM likely prevented earlier price spikes, their limited duration capacity became evident.
Historical data shows that previous expensive grid days, such as January 24, 2019, and February 18, 2008, also occurred during high temperatures.
Future Outlook and Investment
To address battery capacity limitations and enhance grid stability, numerous new gigawatt-scale and four-hour battery systems are currently under construction or commissioning. These projects, including Solar River, Reeves Plains, Limestone Coast, Goyder, and Bunder batteries, are anticipated to become operational within the next three years. Dr. Dylan McConnell, an energy analyst, projects that South Australia may approach its 100% net renewable target within six to twelve months beyond the legislated 2027 timeframe.
The state's progress is attributed to factors such as favorable wind resources, early permissive planning regimes, and consistent policy support. Global renewables company Neoen has invested $2 billion in South Australia, citing the efficiency of the state's permitting processes. Local communities have also supported renewables development.
Despite advancements, South Australia imported 11% of its energy last year, primarily from Victoria. Ongoing challenges include delays in Project EnergyConnect, a major electricity cable linking NSW to South Australia, and the temporary extension of AGL’s Torrens Island gas generator. Gas-fired turbines continue to play a transitional role in ensuring system stability when solar and wind power generation is insufficient.
Beyond environmental considerations, South Australia's renewable energy initiatives have attracted substantial investment. Future plans include exporting excess green energy to other states and utilizing green power for industrial decarbonization, potentially enabling the export of products like green steel and hydrogen.