The COVID-19 pandemic has impacted all aspects of life as we know it, but surprisingly, electricity demand in Australia and excess daytime solar energy generation has remained constant.
Analysts are predicting that the effects of lockdown and slowdown in industrial activity will result in a 5 per cent global reduction in emissions, but Australians are still using the same amount of electricity as before lockdown.
A National Energy Emissions Audit published by The Australia Institute showed that demand was only 2.4 per cent lower than the same period in 2019 (March-May). Excess daily solar energy generation creates what is known as the duck curve.
As the diagram shows, energy demand at night is low but ramps up in the morning as soon as people start their daily activities. As the day gets brighter, there is a big dip in demand between 8am and noon because rooftop solar generation is at its most effective.
How working from home cancelled out excess daytime solar generation
Lockdown immediately caused industrial and commercial activity to plunge, but it also created other electricity-thirsty activities: Working and schooling from home. Simply put, the bottoming out of industrial and commercial electricity demand has been replaced by demand from people’s homes as they stream video, use laptops, lights, kettles and more.
The duck curve results from rooftop and large scale solar farms flooding the National Energy Market with excess daytime electricity. As soon as the sun goes down, coal and gas-fired power stations need to increase their output to make up for a very rapid loss of generation. Another factor thrown into the mix is that 2019 was another record year for new installed solar capacity on homes and small businesses, with the trend continuing into 2020 so far. This means more solar energy in the market.
Over the 2020 Easter weekend, the share of electricity consumption in Australia’s main grid being supplied by renewable energy projects exceeded 50 per cent for the first time. So what’s the way forward?
Batteries rely on price volatility
Not too long ago, batteries were very much looking like the major contender to harness excess daytime solar to be released onto the NEM in the evening. But for batteries to be viable, they need to buy energy when it is cheap and release it back into the grid at a profit when spot prices peak in the evening.
Coupled with historical-low oil prices, COVID-19 has coincided with the lowest NEM quarterly average price since 2016. This decreasing wholesale energy price trend is set to continue.
One reason is that prices for natural gas are very low so that gas-fired power stations can make lower bids for electricity. Gas prices fell through much of 2019 and dropped further in the first quarter of 2020. Also, coal and hydropower plants lowered their bids in this more competitive environment. More wind and solar power will come into the market, and there is no underlying growth trend in electricity demand. Relaxation of COVID-19 restrictions is unlikely to make a big difference. What may drive prices up once again is the next large coal plant closure.
The way forward
Experts agree that the way to manage the duck curve is through a more holistic approach. Instead of programming everything around coal or flooding the market with solar and wind generation, the National Energy Market can reach its goal by pursuing all other forms of energy generation. By including renewables, pumped hydro, batteries, alternative technologies, virtual power plants, and even the use of electric vehicles, we can solve the duck curve predicament.