In recent weeks, there has been plenty of discussion about the need to invest in new peaking power stations to balance out wind generation. Much of this discussion ignores the facts about how the National Electricity Market works. Here are the facts you need to know:
- Wind is a variable energy source. A wind farm over the course of a year is likely to have a capacity factor of around 35-45%. In other words, on average 35-45% of the rated capacity produces output at any point.
- The system operator, the Australian Energy Market Operator (AEMO), in forecasting the availability of plant in the market only allows wind capacity to contribute around 10% towards peak demand due to this variability.
- Accordingly, rather than building new peaking power stations, the contribution of wind is to displace combined cycle gas and coal at times of baseload demand.
- AGL and other modelling results confirm this. AGL’s most recent modelling shows that the addition of 10,000 MW of new renewable capacity reduces the amount of new gas-fired capacity required by 1,700 MW due to these impacts.