PEC Stage 1 in operation – be careful what you wish for

The last week in the NEM has seen the first regular operation of Project EnergyConnect stage 1 (PEC1). The first leg of this long-awaited project connects the South Australian high voltage network to New South Wales via a new 330kV transmission line from Bundey (SA) to Buronga (NSW).

Transmission lines ain’t Interconnectors

This new physical link doesn’t show up in the NEM as a new interconnector between New South Wales and South Australia, but as an increase in capacity – about 150 MW each way – on the existing Victoria – South Australia AC interconnector. As well as being part of the existing south western New South Wales 220kV network, Buronga is connected to the Victorian grid via a 220kV line running to Red Cliffs near Mildura.

PEC1 will still impact power flows on the New South Wales network. But for this initial stage of operation, AEMO has determined that wrapping PEC1 flows into aggregate transfers between Victoria and South Australia is the most practical way to represent the effects of the new link in market dispatch. When PEC Stage 2 (from Buronga to Wagga) is completed in 2026, these arrangements will change and a new, larger capacity South Australia to New South Wales interconnection will appear in its own right.

Obviously the new PEC1 route runs nowhere near the long-standing Heywood interconnection from south west Victoria to south east South Australia – so its incorporation into “the Victoria – South Australia interconnector” is a very useful reminder that in the NEM an AC interconnector is not a specific transmission line crossing a border. It’s simply shorthand for all the routes over which power can flow from one NEM region to another on the grid, following the physical laws of AC networks.

DC interconnectors – like Murraylink which runs between north west Victoria and South Australia – are different in that they are directly controllable, and thus operate more like scheduled generators or loads.

Constraint relief (of sorts)

Beyond its interest for amateur electrical engineers, PEC1 is going to have some significant impacts on NEM dispatch outcomes. Because of its location in a capacity-limited and frequently constrained part of the Victorian and New South Wales grids, my guess is that the role of the new link in relieving constraints in this area is going to be at least as visible as any increase it may allow in maximum transfers.

The operation of Murraylink provides a direct precedent for what we could see with PEC1 in operation. In recent years, Murraylink daytime flows have typically been strongly westward, despite the fact that South Australian spot prices are usually close to and often below Victorian prices in the middle of the day.

Without going into the gory details, this happens because westward flows on Murraylink relieve network constraints that surface when there is strong generation in this part of the Victorian and New South Wales grid, facing limited capacity to transfer output south and east towards the states’ load centres. The NEM’s economic dispatch mechanism, together with affected generators offering their output at very low prices, often results in scheduling of these westward flows even when regional spot prices are higher in Victoria than in South Australia, in preference to curtailing generation offering at low prices. (But generation elsewhere still gets curtailed because of these transfers – namely marginal generators in the receiving South Australian region.)

By contrast, up until now, we have typically seen flows on the Victoria – South Australia AC interconnector in the opposite, eastward direction during daytime hours, more in line with regional price differences.

As an example, may I present V^^V_NIL_KGTS

But with PEC1 in operation, some of the relevant constraints have now been updated to also include transfers on the Victoria – South Australia AC interconnector as a relieving term. As an example, one constraint that has been particularly prominent so far is a voltage stability constraint that manages line loadings in north west Victoria, identified as V^^V_NIL_KGTS. AEMO has variants of this constraint for use with and without PEC1 in operation (the ‘without’ variant, now labelled V^^V_BDBU_KGTS, is what was normally in place before PEC1). Differences between the terms in these variants highlight the inclusion of the AC interconnector (V-SA) with PEC1 in operation.

Qualitatively, it’s not hard to see why this occurs: with PEC1 in service, some proportion of net transfers from Victoria to South Australia (on the AC grid) will flow westward on the new Red Cliffs – Buronga – Bundey pathway, and just like westward flows on Murraylink, this provides an escape route out of the constrained north-west Victorian and south western New South Wales networks when local generation is high. Conversely, if flows were eastward from Bundey towards Buronga, this would tend to worsen this and any similar constraints in the area.

The coefficient of -0.215 assigned to V-SA in the new variant reflects its relative contribution to these relieving flows – by comparison Murraylink has a larger negative coefficient of -0.736. This is because all flow on Murraylink is out of or into the constrained region, whereas only a proportion of overall Victoria to South Australia transfers will flow via the PEC1 route and assist with constraint relief – physically, more power will still tend to flow via the Heywood route.

But somewhat counterintuitively, a numerically smaller constraint coefficient for an interconnector can mean that its physical flow levels are more affected when the constraint is binding, as long as inter-regional price differences remain below certain thresholds. Essentially, relieving a constraint via interconnector transfers requires a change in interconnector flow (relative to levels that would occur if the constraint didn’t exist) which is inversely proportional to its coefficient.

Early impacts

This means that there are now constraints involving the Victoria to South Australia AC interconnector which share some analogous characteristics to others I’ve written about that have had major impacts on Victoria to New South Wales interconnector flows – for example the infamous ‘X5 constraints’ and a separate set around Wagga. Closer to PEC1 we only need look at flows on Murraylink to get some hint of how the new network topology might play out.

And although less than a week of continuous PEC1 operation is a very small sample size, there already seems to have been a significant shift in the behaviour of flows on the Victoria to South Australia interconnector, with median daytime flows into SA right through the day despite significant price differences. (I’ve excluded 27 Jan from this dataset because the very high Victorian demand led to a bunch of other constraints also impacting interregional flows).

While it’s way too early to be certain, I’d guess that we’ll see more of these counterprice flows, larger negative settlement residues on the Victoria to South Australia interconnector, and more NEM watchers scratching their heads over why. Hopefully this post helps clear a bit of the mystery.

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About our Guest Author

Allan O’Neil has worked in Australia’s wholesale energy markets since their creation in the mid-1990’s, in trading, risk management, forecasting and analytical roles with major NEM electricity and gas retail and generation companies. He is now an independent energy markets consultant, working with clients on projects across a spectrum of wholesale, retail, electricity and gas issues. You can view Allan’s LinkedIn profile here. Allan will be occasionally reviewing market events here on WattClarity Allan has also begun providing an on-site educational service covering how spot prices are set in the NEM, and other important aspects of the physical electricity market – further details here.