Impacts and best practices of large-scale wind power integration into electricity markets — Some Australian perspectives

Abstract

Wind generation is playing an increasingly significant role in many electricity industries around the world. It has very different operational characteristics from existing generation and the integration challenge is to facilitate wind in achieving its maximum energy, environmental and wider societal value. Maximizing energy value is a particular challenge for electricity arrangements as penetrations increase. This paper summarises some of the key design features of the Australian National Electricity Market (NEM) relevant to wind integration, assesses its performance to date in facilitating appropriate wind deployment, and outlines possible changes to support much higher wind penetrations in the future. It suggests that the NEM has reasonably effectively and efficiently managed regionally significant wind penetrations to date. Wind is now having significant impacts on market outcomes in high penetration regions. In particular, periods of high wind output are associated with lower wholesale market prices and wind is receiving lower revenue ($/MWh) than other generation types. This reflects the lower energy value of a generation source relying on a non-storage energy source. Projected significant increases in wind penetration due to government renewable energy targets for 2020 will continue to test the adequacy of market arrangements and likely require ongoing market design changes. These changes need to be seen in the wider context of NEM challenges in transitioning towards a low-carbon future.