Payments to stabilise the grid have increased almost 400% over less than a decade as a result of the changing energy mix within the NEM. Noting AEMO’s latest data forecasting 63 per cent of coal-fired generation retiring by 2040, the transitioning energy mix is expected to accelerate requirement for grid services such as frequency control.
Grid services from dispatchable generation has historically been driven by the NEM’s aging coal fleet. In the future, dispatchable generation will become more localised and, as a result, more reliable through local battery storage as opposed to central generation facilities at the end of transmission lines. Active DER management services and increased DER visibility in the NEM will drive significantly greater market opportunities for participation in grid stability.
There were record annual total FCAS costs in 2021. Total FCAS costs for Q4 2021 were $132 million, driven by record Q4 local Queensland costs of around $89 million.[1]
By 2040, the market it expected to have grown to almost 350 terawatt hours of underlying electricity generation supported primarily by distributed PV, utility-scale solar and wind. DERs are expected to contribute approximately 22% of underlying generation.
[1]AER Wholesale Statistics, Electricity Quarter 4 2021 – Frequency control ancillary services.