In a few short years, South Australia is rapidly moving towards renewable energy, with hundreds of megawatts of solar energy getting installed rapidly due to falling prices.
South Australia already saw solar (NYSEARCA:TAN) power becoming the biggest source of power during different times of the week at noon when numerous rooftop solar power systems generated at their full capacity.
Read more about the Solar industry in Australia.
The state has got 800 MW of solar rooftop capacity and now large solar farms are also being set up rapidly which should further boost solar capacity. The state already has 1800 MW of wind power capacity and this is being boosted by new small and large solar utility scale plants being set up. The rapid scale up in solar systems will soon see times when the solar generation alone may be large enough to meet the entire demand which will lead to huge changes being made to the power systems. With such a high share of intermittent power, the integration of renewables will require better systems and processes. Storage is already being used to add resilience to the grid and soon may be used to smoothen the flow of RE.
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The addition of renewable energy(NYSEARCA:XLE) has started to reduce the average wholesale power prices in the market which are now being seen in the range of 7-8 cents/kWh. However, this price should go down further as the current prices are being affected by the lack of competition as the large power generators are owned by a few companies. As the number of solar farms goes up, the competition will start affecting the existing fossil fuel power plants who will no longer be able to afford to keep their prices high. With increasing competition, wholesale power prices will fall.
The Australian energy market operator expects that the power from renewable energy will exceed 70% by 2021 and by 2025. If all the plans of RE plants go as expected then 100% of the power in South Australia will come from renewable energy sources.