“Often, system security is the most urgent and pressing challenge and needs investment in additional plant and infrastructure.”
— Daniel Westerman, Clean Energy Summit 2025
If energy capacity is akin to the human cardiovascular system, system strength is the heartbeat of the grid.
What Is System Strength, Technically?
In grid terms, system strength is often proxied by available fault level, which depends on fault current—i.e., how much current sources can inject during a fault. The higher the fault current, the more strongly the system behaves like a stiff voltage source, which helps:
- Maintain voltage stability during disturbances
- Ensure protective relays function reliably
- Prevent excessive voltage dips that knock out inverter-based resources
If fault current capability is weak, even small disturbances can propagate, causing voltage collapse or tripping of generators’ protective equipment. So system strength is not optional—it’s foundational.
Inertia, a related concept, is the energy stored in rotating machines that resists frequency changes – it helps the grid “ride through” sudden supply-demand imbalances by slowing the rate of frequency change .
As we retire traditional synchronous generators (coal, gas) that naturally provided system strength and inertia, these qualities must be supplied in new ways. Unfortunately, lack of system strength is already biting.
AEMO’s 2024 System Strength Report revealed extensive shortfalls emerging across the NEM. For example: Queensland faces new shortfalls of about 105–173 MVA at several nodes by 2026–27 ; Tasmania is experiencing ongoing shortfalls at all four of its nodes ; and Victoria needs roughly an additional 368 MVA of fault level at Red Cliffs by 2025–26 to meet requirements . These shortfalls mean parts of the grid are “weak” – unable to reliably support new inverter-based renewables or even existing distributed energy. The real-world impacts are evident: in the West Murray Zone (northwest VIC/NSW), multiple solar farms have been heavily curtailed due to insufficient local system strength , and in Far North Queensland, new renewable projects have stalled because the local grid lacks enough fault current to support them . Even in high-renewables regions like South Australia, developers have had to invest in costly workarounds (like synchronous condensers or special grid-forming battery setups) just to get projects connected.
Despite its importance, system strength historically had no market price – it’s an essential service but wasn’t traded like energy or FCAS. Right now, addressing system strength gaps falls to Network Service Providers (NSPs), who are incentivised by the RAB to build capital-intensive equipment. For instance, in South Australia the transmission operator installed four large synchronous condensers (spinning machines that provide fault current and inertia) at a cost of ~$166 million. While effective, this approach raises costs and highlights a policy gap: there’s no transparent market to procure system strength from the most efficient sources, and the incentives for network companies are skewed toward building new assets.
Under current regulations, networks earn a regulated return on capital expenditures (poles, wires, new kit) – which historically led to “gold-plating” of grids and a 60% increase in asset base per customer in the 2006–2015 period. They don’t earn profits for operational contracts with third-party providers. This means an NSP has a bias to construct, say, a new synchronous condenser (which goes into their regulated asset base) rather than contract a lower-cost solution like an existing gas plant operating in “synchronous condenser mode” or a battery providing virtual inertia/system strength. The result is often opaque, piecemeal procurement and missed opportunities for innovation.
What are our options then?
Before we delve into how we can fix this, we need to look at what technologies are available.
Grid-Following (GFL) Inverters
- They “follow” the grid, using phase-locked loops and injecting current in a controlled fashion.
- Their fault current injection is limited and passive; they typically can only deliver ~1.0 pu (i.e. rated current) or slightly above before hitting their device limits.
Synchronous Condensers (Syncons):
- Syncons are proven machinery with strong fault current (up to 5-6 pu) and also provide inertia.
- However, they are expensive, have long lead times, and provide no real energy to consumers.
Clutched Gas Turbines (GTs):
- Clutched GTs can switch between generation and system strength mode (this works by turning off the gas turbine and letting the syncon part of the gas plant to continue running from energy drawn from the grid), are dual-purpose, and a relatively cheap retrofit.
- As they rely on gas, they can act as back-up insurance for the grid should we run out of solar, wind and firming (from batteries and hydro) for extended periods of time. In fact, AEMO’s 2024 ISP calls for an increase in gas-powered generation despite most gas plant developers struggling to create an economically viable business case.
- Unfortunately, they are still fossil-based unless fitted with carbon capture and storage.
- There is currently no incentive for gas generators to retrofit a clutch or include one when planning a new gas plant as there is no guarantee that they will be paid for provision of system strength or inertia.
Grid-Forming (GFM) Inverters
- They behave like voltage sources, helping to maintain a reference, supply fast active/reactive power changes, and support weak-grid operation.
- They can push somewhat higher fault current than GFL, but they’re still limited by semiconductor current limits, thermal constraints, and control stability.
- Tesla’s 2025 whitepaper showed a clear path forward: oversizing inverters relative to battery capacity. If you oversize the inverter (i.e. install converters rated above the continuous power requirement of the battery), you give more headroom for short-term overcurrent.
- The UK’s Stability Pathfinder program contracted for battery systems to deliver fault current comparable to synchronous condensers. Some inverter OEMs already design for ~1.5 pu. With advanced control and oversizing, you can push toward ~2 pu or more for short durations (tens of milliseconds) before thermal limits kick in.
- Thus, oversizing is technically viable—but only when the business case justifies it (i.e. there’s demand or payment for the extra capacity).
Why Oversizing and Retrofitting Isn’t Already the Norm
Because there’s no direct revenue signal today for providing system strength or excess short-circuit capability. Engineers working to deliver a battery project or clutched GT will optimise for:
- Efficiency (minimising losses)
- Cost per MWh or capital return
- Revenue from energy arbitrage, frequency services, etc.
If you oversize a GFM inverter or retrofit a clutch, you add cost and possibly reduce efficiency (or must reserve headroom) with no guarantee of incremental revenue unless contracted by an NSP. That’s precisely why, until we build a system strength market or equivalent mechanism, oversizing of GFM inverters or retrofitting clutches remains an academic possibility rather than standard practice.
What’s a possible fix?
We need to treat system strength as a tradable service, just like energy, to incentivise the best solutions. Key reforms include:
- Create a system strength market: Establish competitive procurement (with locational pricing) for system strength. This would allow various providers – e.g. clutched gas turbines, synchronous condensers, grid-forming batteries – to bid to provide fault current and stability in areas that need it. Competition ensures the grid can get the needed strength at lowest cost, instead of defaulting to monopoly network investments.
- Enable hybrid solutions: Allow low-carbon emission generators to earn revenue as a generator when needed, and provide inertia/system strength at other times without burning fuel. Grid-forming batteries similarly can earn stacked revenues (energy + stability services) if given the chance. Opening markets for these services would unlock dual-purpose assets that improve stability and still meet emissions goals (e.g. gas plants can provide system strength in condenser mode or with offsets to remain aligned with climate targets).
- Align incentives for NSPs: Change regulatory settings so network companies are indifferent between building infrastructure and contracting services. If NSPs could earn a return or incentive for securing system strength as a service, they would be far more likely to procure from existing assets or new battery projects when it’s cheaper than building new synchronous machines. A transparent market with clear obligations (e.g. trigger competitive tenders when strength falls below a threshold) would shift the focus to outcomes over assets.
By explicitly incorporating system strength (and inertia) into market mechanisms – for example, including it in the upcoming Electricity Services Market (ESEM) alongside energy and capacity – the NEM can send the right signals to solve this “invisible” challenge. We should be paying for the service (a strong, stable grid), not just the equipment. With the right framework, providers like retrofitted gas units or batteries will compete to supply strength, ultimately lowering costs to consumers while enabling more renewables to connect.
This would be a win-win-win-win:
- For AEMO: locational provision of system strength where needed
- For consumers: system strength is currently paid by consumers to NSPs. Using the power of markets would increase transparency and competition (lowering the cost)
- For developers: new revenue streams, making FID more palatable
- For the nation: more dual-use assets (providing medium-duration firming, long-duration back-up insurance against dunkelflaute with more clutched GTs, and higher levels of system strength to enable higher levels of low-cost renewables)
Australia could even pioneer metrics like a Levelized Cost of System Strength (LCOSS) to transparently compare solutions, ensuring we invest in what the system truly needs – not just megawatts, but megavars and fault level too.
Disclaimer: The views expressed in this post are my own and do not represent the views of my employer or any organisation I am affiliated with. This work is independent and intended to contribute to public discussion on policy and systems design.
