Manage our power generation assets efficiently to ensure security of supply for customers.
Achieve budgeted equivalent availability factor (EAF) across AGL’s power generation fleet1.
Reliability and energy system transition
The current generation mix in the National Electricity Market (NEM) is relatively old and emissions-intensive. Around 75% of the installed thermal capacity is already operating beyond its original design life; to replace this energy capacity, both renewable and lower-emission fossil fuel generation sources will form an integral part of the energy mix throughout the transition to a low-emission economy.
Recent heatwaves and storms, which have triggered load-shedding and black out events, have caused increasing anxiety amongst customers, industry and governments about the ongoing security2 and reliability3 of the energy system. Additionally, the abrupt closure of ageing thermal power plants (such as Northern and Hazelwood power stations) has highlighted the need to responsibly manage this transition towards future energy needs in a way that does not impact the security and reliability of energy.
Read more about the transition to a lower-carbon economy in our Energy market evolution and Power station transition and closure sections.
Reliability in the NEM
The framework for delivering reliability in the NEM is primarily market based. AGL, as a generator of electricity in the NEM, is one of a number of players in the market, including other generators, operators of transmission and distribution networks, and the Australian Energy Market Operator (AEMO), that all contribute to the security and reliability of the grid.
The Australian Energy Market Commission's Reliability Panel sets standards relating to the safety, security and reliability of the NEM. The panel’s reliability standard currently requires there to be sufficient generation and transmission interconnection to meet 99.998% of annual electricity demand supplied in the NEM.
The Energy Security Board is currently reviewing the generation sector’s reliability framework through the proposed National Energy Guarantee (NEG) which seeks to provide greater assurance that the NEM’s reliability needs will be met. Read more about the NEG in our Energy market evolution section.
Business resilience and reliability
A key aspect of our commitment to providing reliable energy is to ensure our organisation is resilient. Resilience encompasses our ability to anticipate, protect, respond, recover and adapt to uncertainty, change and disruption, with limited impact on our business. Our approach to business resilience is set out in our Business Resilience Principles Framework document.
In a complex and increasingly uncertain operating environment, we see building resilience capacity and maturity as critical to achieving our strategy and our ability to continue to reliably operate critical infrastructure, such as our key generation assets. As an owner and operator of critical infrastructure, and one of Australia’s largest providers of essential services, we are committed to developing and maturing our resilience capability for the benefit of our people, customers, shareholders and energy users generally.
Investing in the ongoing reliability of our energy system
We are committed to taking a leading role in the transition of Australia’s energy sector to ensure that the energy system of the future is reliable, as well as affordable and environmentally sustainable. We will do this through disciplined investment in renewable and low-emissions technologies, and through evolving our suite of distributed energy solutions, which enable customers to directly participate in the transition to a low-emissions future (such as distributed renewable generation, battery storage and demand management products). Further detail is provided in the Energy market evolution section.
During FY18, we progressed the following initiatives:
New South Wales (NSW) Generation Plan: An important part of ensuring reliability of energy is providing sufficient notice of proposed closure of generation assets to provide a signal to the market on the need for further investment. In 2015, we gave effectively seven years’ notice to the market that we would close our Liddell Power Station in 2022. In December 2017, we outlined our plans for the Liddell Power Station site beyond its retirement, in our NSW Generation Plan. The NSW Generation Plan proposes a mix of high-efficiency gas-fired power stations, renewables, battery storage and demand response, coupled with an efficiency upgrade at Bayswater Power Station and conversion of generators at Liddell into synchronous condensers. Read more about our NSW Generation Plan in the Power station transition and closure section.
Complementary firm capacity: In an environment where the cost of renewables is falling, and the gas price remains high, it is unlikely that a long-term investment case can be made for baseload gas as a replacement for baseload coal. However, we see a case for the development of gas-fired power stations to provide ‘firming’ output to complement intermittent, renewable plant. In April 2018, we announced that we would construct a 252 MW gas-fired power station, located near Newcastle, NSW. AGL also proposes to build an additional 500 MW of firming capacity from another gas-fired power plant in New South Wales as part of Stage 2 of the NSW Generation Plan. Read more about our NSW Generation Plan in the Power station transition and closure section.
In FY18, we announced an innovative approach which aims to effectively increase the reliability of renewable energy generation. Our ‘Wind Product Firming Unit’, rolled out in South Australia and Victoria in April 2018, has been developed to allow intermittent wind energy to be bundled with dispatchable energy (such as gas peaking generation) and be contracted like other forms of ‘firm’ energy.
Barker Inlet Power Station: During FY18 we commenced construction of the Barker Inlet Power Station, located adjacent to our Torrens Island Power Station. When completed, the reciprocating engine, gas-fired Barker Inlet Power Station will have a capacity of 210 MW. The new power station will replace two of the four Torrens A turbines which we will progressively mothball from 1 July 2019. The Barker Inlet Power Station units will be able to ramp from zero to full capacity in five minutes, and are 28% more efficient than the units they will replace.
Bayswater Distributed Control System (DCS): In March 2018, we commenced installation works of a $63 million DCS at the Bayswater Power Station. The DCS is designed to improve the reliability (effective availability factor) of the power station.
Demand response: Demand response is a form of demand-side management, where energy users are compensated to reduce their energy usage at peak times, hence reducing the likelihood of load-shedding events or blackouts. In October 2017, AGL entered into a partnership with the Australian Renewable Energy Agency (ARENA) and the New South Wales Government to supply 20 MW of demand response in New South Wales, as part of the Short Notice Reliability and Emergency Reserve Trader (SN RERT) initiative by ARENA and AEMO, for the period 1 December 2017 to 30 November 2020. Refer to the Product innovation section for further details.
Virtual Power Plant (VPP): In FY18 we progressed the development of our VPP in South Australia. The VPP involves 1,000 connected batteries installed in homes and businesses, providing 5 MW of peaking capacity and offering customers the opportunity to save on their energy bills.
For further details, see the Renewable energy and Product innovation sections.
FY18 Performance
We use a number of metrics to measure the reliability of our electricity generation assets including equivalent availability factor (EAF), which measures the percentage of rated energy that is available when required.
In addition to equivalent availability factor, the following information about our generation portfolio is available to view or download in the data centre:
Related information
- 1. Power stations included are: Liddell, Bayswater, Loy Yang A, Torrens power stations, Somerton and Hydro power stations, and wind and solar farms under our operational control.
- 2. ‘Security’ of the energy system refers to the ability of a system to operate within defined technical limits, even if there is an incident such as the loss of a major transmission line or large generator.
- 3. ‘Reliability’ of the energy system refers to whether the energy system has enough generation, demand response and network capacity to supply consumers.