Solar Sponge Tariff

As renewables start supplying larger portions of the electricity mix, cities and states are finding non-storage-based solutions to meet the challenges of integrating variable renewable energy sources such as wind and solar. In 2021, the state of South Australia briefly set a record by producing 143% of its electricity demand from local renewables. While battery storage absorbs some of the excess generation, South Australia uses additional strategies to distribute the surplus while also building more wind and solar parks.

The record production lasted only a few minutes, but throughout 2021 as a whole South Australia registered a full 180 days during which solar and wind power generation exceeded the state’s electricity demand. Investments in transmission lines have allowed South Australia to reduce curtailment of excess renewable electricity by exporting this power to neighbouring Victoria. Newly installed synchronous condensersi also have helped counteract the swings of variable renewable energy moving through the grid, reducing the state’s reliance on natural gas as a stabiliser during high renewables generation. A time-of-use tariff, known regionally as the “solar sponge” tariff, incentivises energy use during daytime hours. The cost of distributing electricity falls 25% during times when solar is most abundant (10 a.m. to 3 p.m.) and rises 125% during peak hours (6 a.m. to 10 a.m. and 3 p.m. to 1 a.m.). The state offers subsidies for residential battery storage, and there are plans to build higher-capacity batteries to further support local renewable generation – among the many options for addressing the variable nature of renewables.

i Synchronous condensers are used for several reasons, including managing minor fluctuations of variable renewable energy by absorbing and producing reactive power. They provide system strength and inertia usually supplied by conventional energy sources such as natural gas. The use of synchronous condensers had declined due to new technologies but has since resurged due to their compatibility with intermittency and variable energy sources such as wind and solar.

Source: See endnote 16 in chapter 06.

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