In Western Australia, one of the sunniest landscapes in the world, rooftop solar power has been a runaway success.

On the state's main grid, which covers Perth and the populated south-west corner of the continent, almost one in every three houses has a solar installation.

Combined, the capacity of rooftop solar on the system far exceeds the single biggest generator — an ageing 854-megawatt coal-fired power station.

But there is now so much renewable solar power being generated on the grid that those responsible for keeping the lights on warn the stability of the entire system could soon be in jeopardy.

Solar power has been hugely popular for households across Western Australia. ( Randy Montoya: Creative Commons )

It is a cautionary tale for the rest of the country of how the delicate balancing act that is power grid management can be severely destabilised by what experts refer to as a "dumb solar" approach.

"We talk about 'smart' this and 'smart' that these days," said energy expert Adam McHugh, an honorary research associate at Perth's Murdoch University.

"Well, solar at the moment is 'dumb' in Western Australia. We need to make it smart."

An isolated solar frontier

Mr McHugh's remarks come at a time of profound change in the energy industry across the globe.

But nowhere is the change being more acutely felt than in Western Australia.

Stuck out on its own at the edge of the continent, he said WA had become "a laboratory experiment in the uptake of rooftop solar".

"We're at the front of the curve, the bleeding edge," Mr McHugh said.

"The technology that we're seeing being developed rapidly around the world is flowing into Western Australia at a more rapid rate, potentially … than anywhere else on the planet."

Thanks to its isolation, solar power influences the WA power grid in a unique way. ( Reuters: Tim Wimborne, file photo )

While much of the debate about the intersection of climate and energy policy is focused on the eastern states — and its national electricity market (NEM) — WA is hurtling towards a tipping point.

At heart of the state's problem is its isolation.

Unlike states such as South Australia, which has even higher levels of renewable energy, WA cannot rely on any other markets to prop it up during times of disruption to supply or demand.

The Australian Energy Market Operator (AEMO), which runs WA's wholesale electricity market (WEM), said the islanded nature of the grid in WA made it particularly exposed to the technical challenges posed by solar.

AEMO chief executive Audrey Zibelman said these challenges tended to be most acute when high levels of solar output coincided with low levels of demand — typically on mild, sunny days in spring or autumn when people were not using air conditioners.

On those days, excess solar power from households and businesses spilled uncontrolled on to the system, pushing the amount of power needed from the grid to increasingly low levels.

Ms Zibelman said WA's isolation amplified this trend because the relative concentration of its solar resources meant fluctuations in supply caused by the weather had an outsized effect.

Low-power days become a big problem

The only way to manage the solar was to scale back or switch off the coal- and gas-fired power stations that were supposed to be the bedrock of the electricity system.

The problem was coal-fired plants were not designed to be quickly ramped up or down in such a way, meaning they were ill-equipped to respond to sudden fluctuations in solar production.

Coal-fired power stations like Loy Yang in Victoria are the traditional backbone to stabilise the power grid. ( ABC News: Peter Giafis )

"What's changing in the WEM is the fact that rooftop solar is now our single largest generator," Ms Zibelman said.

"That has really made a huge difference in terms of how we think about the power system.

"The concern we have for the first time in probably the history of this industry is you start thinking about sunny days during the spring or [autumn] when you don't have a lot of demand, because you don't have a lot of cooling going on.

"And that becomes an interesting issue because you have lots and lots of solar and very little demand.

"We've never worried about a system around low demand. You're always worried about the highest periods of the summer.

"What we're recognising now is that the flexibility we need in the system is one [issue] that we have to think about — how do we integrate solar and storage better? And these are new problems that we have to solve."

Rolling blackouts possible within three years

In a "clarion call" earlier this year, AEMO said that if nothing was done to safeguard the grid, there was a credible danger of rolling blackouts from as early as 2022 as soaring levels of renewable energy periodically overwhelmed the system.

At worst, AEMO warned there was a "real risk" of a system-wide blackout.

Blackouts are a real risk if the system is not stabilised, according to AEMO. ( ABC News: Dean Faulkner )

It said 700MW of demand was the floor below which it would struggle to ensure that voltage and frequency levels stayed within acceptable limits.

"At that point, we worry about the voltage," Ms Zibelman said.

"But also it's that [point] we worry about the other generators, because below that level you actually have demand that's smaller than the smallest generator.

"So if something trips off, it's very hard to respond."

Solar smashes power utility Synergy's finances

The onslaught of renewable energy in WA has cut a swathe through the finances of state-owned electricity provider Synergy.

In September, the utility handed down a massive $657 million loss for the 12 months to June 30, the biggest reverse ever recorded by a government enterprise in WA.

Synergy chief executive Jason Waters noted the bottom-line result was dragged lower by writedowns in the value of Synergy's fossil fuel-fired power plants — revaluations caused in large part by the solar-led changes in the market.

But he said the decisions had to be made to reflect the new order, and they would put the utility in a much better position to plan for the future.

"Our impairment is just reflective of the changing nature of the market," Mr Waters said.

"The assets we have on our books … many of them no longer provide the services they would have traditionally provided.

"Any change to a system that's been very stable and evolving the way our electricity system has for about 100 years means that it's challenging.

Synergy's finances have been badly hit by the disruption caused by solar power. ( ABC News: Marcus Alborn )

"There's no doubt if we look forward and we look at current trends … we do a few years out have some challenging times coming.

"But I've got every confidence that the work that's currently being undertaken … is going to put measures in place to address that."

Building a road map to a stable power network

WA Energy Minister Bill Johnston said the State Government was not shying away from the seriousness of the situation.

He said the Government had launched a series of reviews in a bid to come up with solutions to the state's changing energy needs.

Chief among them would be a "road map" for better integrating renewable energy into a system that was designed a century ago in completely different circumstances.

"There's no question that we have to transform the energy system to take account of these new technologies," Mr Johnston said.

"But the good news is that's exactly what the Government is doing."

While Mr Johnston said he would be guided by the recommendations of the Government-appointed energy transformation taskforce, he acknowledged there were a few obvious changes that could be made to improve WA's electricity system.

One was removing antiquated regulations that acted as a barrier to investment in storage capacity, such as community or grid-scale batteries.

Tesla's powerpack in South Australia is a large-scale battery storage system. ( Telsa Motors: Timothy Artman )

Another was giving the system operator greater control over people's solar panels, which he said would make it easier to balance supply and demand and prevent the risk of solar overloading the grid.

This could allow AEMO to "spill" surplus solar power, rather than have to accommodate it in a way that put the grid under stress.

He said the fact WA's major electricity utilities had remained in state hands was a virtue in efforts to reform the system, in contrast with the largely privatised markets of the east coast.

"One of the advantages we have in Western Australia is because we haven't followed down the sale pathway of privatisation, we can respond very quickly," Mr Johnston said.

"Because we set our own rules, we can change our rules to take account of the needs of the system, and because we own the assets we can deploy the resources of Government and work very quickly to solve all these problems.

"It's one of the reasons we're able to cope with the problems AEMO is outlining … we're able to move quickly because we regulate our own system and we own our own assets."

Power boss urges WA to move fast

Mr Waters said reforms to better encourage batteries was a key first step.

But he said there also needed to be proper incentives put in place for so-called "firming services", which ensure there is always enough capacity on hand to keep the system stable when the wind is not blowing or the sun is not shining.

Technology is crucial to keep the system stable when wind or solar power drops. ( Submitted )

He was agnostic about how these services should be provided — whether by conventional power plants, batteries or paying customers to cut back consumption — so long as the market recognised their value.

But he said WA could not afford to waste any time.

"I think we're still looking into that three- to four- to five-year period … is where we need to get the stuff delivered," Mr Waters said.

"The change is happening rapidly, but I also know in the meantime we have a strong hand on ensuring the system remains stable.

"So, from my perspective, we have sufficient time."

A need for 'smart' batteries

Mr McHugh agreed there was "a sense of urgency" about the need to bring in changes to the market.

He also agreed batteries would be vital to the evolution of the grid by acting as a shock absorber that could soak up excess renewable energy at times of low demand and give it back when demand was high.

There was a caveat, though.

Mr McHugh said batteries could help steady the market by reducing the peaks and troughs in power demand or they could make matters worse.

"The key element to this is that those systems all have to be able to talk to each other," he said.

"They have to be smart.

"If you put dumb batteries in — in the way we have dumb solar — that's not going to help.

He said coordination within the power infrastructure was the key to success.

"It is an orchestra," he said.

"There are many instruments and you need some sort of conductor that is basically coordinating those instruments, otherwise you just get this terrible noise.

"You want the sweet sound coming from the system, you don't want this horrible, messed up, uncoordinated noise."