Understanding Curtailment

Curtailment occurs for two reasons: physical limitations of the grid infrastructure make it unable to take in excess energy generated by renewable sources, or economic considerations when electricity prices are too low to make energy production financially justifiable.

In either case, the outcome is the same – energy is wasted instead of being captured to be used at another time.

Why Curtailment is Affecting Australia 

The primary challenge contributing to Australia's high curtailment rates is the integration of renewables outpacing grid infrastructure advancements.   Although Australia leads the world in per capita rooftop solar PV concentration, with over 3.3 million households contributing to its solar power capacity, the grid's initial design wasn’t built to accommodate even a moderate amount distributed energy resources, let alone nearly one-third of the country’s households. 

The intermittent nature of rooftop solar PV systems creates voltage fluctuations and frequency variations that cause instability in the grid. At the same time, these rooftop solar systems often generate more electricity than a household consumes during peak sunlight hours (around midday). The excess power flows back into the grid, creating bidirectional power flow in a system designed to be unidirectional, with power flowing from centralized generators to consumers. This also intensifies the risk of overloading local transformers and power lines during periods of high solar generation and low demand. 

These technical challenges are compounded by market and regulatory obstacles, as the grid lacks advanced control systems and real-time visibility into the output of numerous small-scale generators. As such, connection processes have become convoluted, leading to approval delays for new installations. Adding to this issue, current electricity pricing structure and regulations are ever evolving to adequately support and reflect the costs and benefits of distributed solar generation. 

This mismatch between renewable energy capacity growth and grid upgrades particularly pronounced in regions like Southern Australia and Western Australia, where significant grid constraints have increased the need for curtailment. 

Impact on Residential and Utility-Scale Solar 

On average, residential solar systems in Australia lose 1.5 % of energy generated due to curtailment from network constraints, with some locations experiencing higher losses of up to 25% according to the University of New South Wales (UNSW). For utility-scale solar, the situation is more severe, as network curtailment is compounded by economic curtailment. 

In October 2023, utility solar systems experienced a combined total of approximately 8% curtailment. Comparatively, they only achieved a 22% capacity factor, meaning there was a 3:1 ratio of energy produced compared to energy lost.

Energy Loss = Economic Loss

The consequences of curtailment go beyond just energy waste. The economic impact manifests in four main areas: 

1. Lost revenue

Solar households and large-scale producers miss revenue opportunities and see higher electricity bills due to reliance on grid electricity during non-generating times. 

2. Investment deterrents

High rates of curtailment may deter potential investors in renewable energy projects, which could indirectly exasperate the issue. 

3. Decline in public support

As curtailment continues to increase electricity bills for residential customers reliant on grid activity, public support may decline for future solar projects without adequate grid infrastructure.