Updated System Strength Framework - System Strength as a Service

New System Strength Rules: Implications for Your Renewable Energy Project's Bottom Line

For renewable energy developers in Australia, understanding the Marginal Loss Factor (MLF) is crucial when considering a connection to the National Electricity Market (NEM) for their project. The MLF significantly impacts future cash flows and financing arrangements. Beyond MLF, there's another grid parameter, developers should consider, that is system strength remediation costs.

Previously, to address system strength impacts arising from displacement of traditional generating plants with renewables generators, the controversial “do no harm” principle was enforced. Following an impact assessment, prospective generators might have been mandated to bolster system strength and equip their connection points with additional grid supporting equipment such as synchronous condensers. These conditions sometimes resulted in inflated capital expenditure for the inverter-based resources (IBR) such as wind, solar and BESS projects. Synchronous condensers, which come in fixed sizes, may not always meet the precise needs of a project.

Thankfully, the new framework now offers a more coordinated approach to manage system strength.

Understanding System Strength

Before delving into the details of the new framework, it's vital to define 'system strength. AEMO defines system strength as the power system's capacity to maintain and control voltage wave forms at any given point, both during standard operations and after disturbances.

In a strong system, a fault or an unexpected change on the grid such as a lightning strike, a thermal plant unit trip, or a transmission line falling down, the voltage waveforms will not change much and will recover quickly allowing AEMO to operate the power system stably.  This is the case in a grid mostly populated with synchronous plants. When disturbances occur, these machines can provide short bursts of energy far beyond their stated rating, which helps restoring the voltage waveform. Noting that there could still be pockets of the network which are electrically remote from these generators that would experience low system strengths.

On the other hand, in a power system dominated by Inverter-Based Resources (IBR) such as renewable plants and Batteries Energy Storage Systems (BESS), system strength is lower. IBRs rely on stable external voltage sources to operate predictably. As IBRs become more prevalent, their responsibility for provision of system strength grows.

The New System Strength Framework Explained

Under the new rules, AEMO and the TNSPs are tasked with maintaining fault levels at the NEM's main nodes, thereby setting a system strength baseline.

At the early stage of a proposed IBR connection, NSPs are required to perform a preliminary fault impact assessment (PIA) to provide initial guidance to the developer in relation to the system strength requirements for the connection.

Should a need to supplement system strength be identified, applicants have two options in front of them: either to self-remediate via a System Strength Remediation Scheme or to accept to pay the system strength charges.

Self-remediation could take the form of System Strength Works (i.e. network alterations) or provision of additional equipment such as installation of synchronous condensers.

Alternatively, the developer may decide to pay for the system strength charges. System strength charges are based on three main components.

·       System Strength Unit Price (SSUP)

·       System Strength Locational Factor (SSLF)

·       System Strength Quantity (SSQ)

The SSUP represents the projected cost of supplying system strength at a node. SSLF indicates the electrical distance from the closest node to the connection point. The SSQ factors in the plant's size in megawatts (MW) and its short-circuit ratio (SCR) needs.

Crucially, this SSQ isn't a straightforward ratio, but a value highlighting the generator system's stability.

In the NER, SSQ is computed as a product of the short circuit ratio (SCR) and either the rated active power, rated power transfer capability, or maximum demand for the system strength connection point.

Earlier this year, AEMO’s released a document that presents a proposed methodology to compute the 'system strength quantity' (SSQ). It aims to be in line with the intentions of the National Electricity Amendment related to efficient management of system strength framework - Rule 2021.

However, the proposed SSQ calculation differs from of the NER. As a result, connecting Network Service Providers (NSPs) are advised to ponder over this methodology for it appears to better embody the rules' spirit.

The System Strength Impact Assessment Guidelines (SSIAG) dictates a methodology to compute the ΔAFL (reduction in available fault level) resulting from a connection. The ΔAFL parameter is necessary to size the self-remediation work (Option 1).

The intent of the proposed system strength rule change made in 2021 was to have the SSQ for new connections represent the estimated system strength consumption. It was noticed that the SSQ formula in the NER could lead to a considerable over-estimation of the system strength required for each connection. This overstatement affects both system strength service procurement and system strength charge for parties connecting. AEMO suggests that the SSQ calculation should be adjusted using a stability coefficient, which considers fundamental stability limits. The proposed coefficient value is 1.2, used to determine the ΔAFL caused by a connection. The new formula for SSQ will be amended as follows:

AEMO has initiated a rule change proposal to the AEMC to align SSQ with this proposed methodology. Should it be accepted, it could reduce system strength charges significantly.

A Practical Example

To illustrate the implications of these changes, let's look at a practical example.

Let's consider Developer X, who wishes to connect a 100MW solar farm to the 132kV Bodangora network.

The nearest system strength node is Wellington Terminal station, which has stated system strength charges of $2,888 per MVA/year. Factoring in the SSLF for Bodangora (1.079) and using a default Short Circuit Withstand of 3, the estimated system strength charges would amount to $934,845 per year. However, with AEMO's proposed rules changes, charges would drop to $560,907 annually. Furthermore, selecting IBRs the plant for a lower Short Circuit Withstand of 1.6 could bring down costs to just $124,646 yearly.

Alternatively, Developer X may should also assess self-remediation routes.

At Bonaparte, we're dedicated to guiding developers through these pivotal early technical decisions, ensuring the best outcomes for every project.