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Realising the value of Smart Power Generation

Due to be fully operational in the second half of 2019, Barker Inlet Power Station is the first utility-scale reciprocating engine power plant to operate on Australia’s National Electricity Market.

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The contract to deliver the new 211 MW Wärtsilä Smart Power Generation (SPG) plant was placed by AGL Energy Limited, Australia’s most significant publicly listed investor in renewable energy. Equipped with 12 Wärtsilä 50DF dual-fuel engines, each capable of generating approximately 18 MW of output, the plant will run primarily on natural gas with the option to switch to liquid fuel if necessary.

With its fast-starting and rapid response capability, the Wärtsilä solution has the flexibility needed to quickly respond to the fluctuations in supply that are a characteristic of renewable generation sources, such as the wind and solar energy harnessed within the South Australian power system. Furthermore, the engines operate at a higher efficiency than other forms of gas power plants currently available.

Referred to as Barker Inlet Power Station, the SPG plant, located about 18 kilometres from the central business district of Adelaide, South Australia, will contribute to efforts to phase out existing steam turbines with technology that produces less greenhouse gas per unit of electricity generated.

Suraj Narayan, Regional Director Wärtsilä Energy Solutions in Australia & Oceania, explains that this shift has been a long time coming.

“Gas turbines have typically been the technology of choice for many utilities. We have been working in this market for at least the last seven years, actively trying to promote reciprocating engines as an alternative to gas turbines because we believe that they provide superior value to a utility’s portfolio as renewable penetration increases.”

 

An increasing need for security and reliability

As Narayan points out, the South Australian market’s high usage of renewables is continuing to rise. In 2017, the Australian Energy Market Operator (AEMO) projected that by 2020-21, the region will produce 73% of its energy from renewable sources – a sharp increase from approximately 49% of the region’s total generation in 2016-17.

As a result of this heavy mix of wind and solar power, South Australia is growing ever more reliant on solutions that bring stability to the grid.  

Since electricity is not easily stored, Australia’s National Electricity Market (NEM) functions as a pool, referred to as a wholesale spot market. In this market design, AEMO matches power demand with supply in real time, defining the most cost-efficient bid from all of the generators for every five minutes. One result of this system is that spot prices are highly volatile in the market, and players – such as retailers who buy electricity from the pool – have to manage their risk exposure to this price volatility.

According to a study commissioned in 2014 by Wärtsilä from ROAM Consulting, an Ernst & Young company, SPG plants operating as part of the portfolio of a large utility in South Australia, within the NEM pool, have the potential to decrease the utility’s risk exposure by reducing the volatility.

The study found that the operational agility and capability to reach full load from start-up in less than five minutes provided by the internal combustion engine (ICE) technology used in SPG plants, enables a superior position in the five-minute market compared to slower peaking plant technologies, such as gas turbines.

The flexibility of the Wärtsilä SPG plant, such as the one delivered to Barker Inlet Power Station, thus serves as an enabler for utilities to manage large amounts of solar and wind energy being introduced into the region’s power system. 

“The new power plant will improve the reliability and security of supply in South Australia,” commented Doug Jackson, Executive General Manager of Group Operations at AGL, when announcing the order in February 2018.

“We managed to demonstrate a high level of understanding of AGL’s needs and provided a tailored techno-commercial solution,” says Narayan. “Wärtsilä’s solution provides better value to AGL and that was the key reason for their decision.”

He expects that more market players will realise this advantage.

“I’m very confident that we will see this continue. Because of the nature of the grid nowadays and with more and more renewables coming in, we expect a greater need for flexibility. We are optimistic that other utilities like AGL will see the value in our technologies,” Narayan asserts.

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"Because of the nature of the grid nowadays and more and more renewables coming in, there is a greater need for flexibility. We are optimistic that other utilities like AGL will see the value in our technologies."

Suraj Narayan, Regional Director Australia & Oceania, Wärtsilä Energy Solutions

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