Australia is periodically producing such vast amounts of renewable energy that more than a quarter of the wind and solar power generated has to be wasted.

In what analysts say was a glimpse of the nation's green future, authorities recently had to spill — or "curtail" — a record amount of wind and solar power in New South Wales to stop the system being overloaded.

Geoff Eldridge from consultancy Global Power Energy said the share of green energy spilled hit 27.4 per cent at one point, up from the previous high of 27.2 per cent.

Amazingly, the amount of curtailed renewable power was equal to the entire output from coal-fired power stations in NSW at the time.

Mr Eldridge said the new record, set amid warm temperatures and relatively low demand for power, was a hint of what was to come as Australia's energy system became greener.

"It (curtailment) has always sort of been a feature," Mr Eldridge said.

"But if you look at the numbers, we see it's growing each year.

"We have probably 10 per cent of the utility wind and solar energy being curtailed in a 12-month period, and that will probably grow."

Charged up with nowhere to go

Indeed, the Australian Energy Market Operator forecasts about 20 per cent of renewable energy will be spilled on average by the middle of the century.

Currently, it is less than 10 per cent.

Mr Eldridge said there were perfectly good reasons why renewable energy would be spilled, but it still felt like a waste.

"With the wind and solar, the fuel source is zero," he said.

"Once you've built the thing … your fuel source is free.

David Dixon from global research firm Rystad Energy said there were two types of curtailment that affected large-scale sources.

The first, he said, was technical and happened when there was too much renewable energy trying to push down a limited transmission line.

"Say a transmission line has 100 megawatts of capacity on the line, but there's 200 megawatts of solar farms on that line," Mr Dixon said.

"So either both of you turn down 50MW, or one turns down the full 100MW.

"You just cannot get enough capacity on the line for the amount of generation available in that region."

The other, by contrast, is more abstract.

Put simply, he said it arose when there was so much renewable energy sloshing through the electricity system that prices fell below zero, meaning generators had to pay someone to take their output.

'Too much' of a good thing

And prices have been turning negative more often as ever more renewable energy has been added to the system.

In Queensland, for example, the market operator noted spot prices were negative 14 per cent of the time in the three months to June 30 — up from 9 per cent a year earlier.

"An example there is, you have the solar generation available and the networks available, but if the price is zero or negative you will switch off if prices go too deep … because you don't want to pay to generate."

A third instance affected households with rooftop solar.

This related to the extraordinary powers available to Australian Energy Market Operator (AEMO) in places such as South Australia and Western Australia to effectively switch off rooftop solar systems if the grid was at risk of being overloaded.

However, pulling this lever was much less common.

Making matters worse for large-scale renewable generators were the physics of Australia's current electricity system.

Mr Dixon pointed out that coal generators were still the linchpins of the national electricity market (NEM) covering Queensland, New South Wales, Victoria, South Australia and Tasmania.

But he said coal plants were relatively inflexible by design and could only turn down their output so far to accommodate renewable energy.

Past that point, he said, they would pay to keep generating in order to avoid a costly and time-consuming shutdown.

When added up, Mr Dixon said the combined minimum generating capacity of coal plants in the NEM – the floor below which they typically could not go – amounted to about eight gigawatts, or roughly a third of average demand.

In NSW alone, the floor for coal power was about two gigawatts.

As a consequence, he said there was less room for wind and solar power.

"That's as low as they can go down to as a combined entity," Mr Dixon said.

"But that doesn't mean there's no energy demand for this solar that's available to us.

When something has to give

Despite these challenges, Mr Dixon said there was "light at the end of the tunnel".

For starters, he said "every time a coal facility comes out of the grid it opens up more space" for renewable energy.

With Australia's remaining coal plants set to retire over the coming years, he said the physical limits posed by that technology would fall away.

Equally, Mr Dixon said the glut of renewable power — particularly solar output in the middle of the day — was creating all the incentives needed to spur investment in storage such as batteries.

"The price signals in the middle of the day are basically telling us that we're over-saturated in the middle of the day in supply," he said.

"And during the evening peaks we're under-saturated in capacity.

"Storage is basically the ability to quickly shift energy from the middle of the day to the evening peak.

In the face of claims that curtailment was a sign of the wastefulness and inefficiency of green energy, Mr Dixon was unperturbed.

He said an energy system that ran to a significant degree on renewable energy would need to have some spillage — "in the order of 10 per cent".

If there was no – or little – spillage, he said it probably meant more expensive fossil fuels were being used to fill the breach.

"If you are in a system where you have no waste and you dispatch all your solar, that means there's gaps in your supply and demand that have to be filled by something else," he said.

"And that something else is typically always an energy source that's more expensive than the solar or the wind.

"That could be, typically in Australia, coal or gas. Those fuel sources tend to be, particularly gas, far more expensive."

With change comes opportunity

For Mr Eldridge, there was no need to be afraid of curtailment so long as it was managed properly.

He said the fact it was happening the most in South Australia was telling given the state's role as flag-bearer for the energy transition.

It was, he said, a portent of Australia's future and one the country would need to learn to use to its advantage.

As well as a signal for the need for more storage, Mr Eldridge said it was also an opportunity for any electricity users who could shift their demand – or "load" – to those times when supply was most abundant.

"It's a design feature of the way we've chosen to decarbonise our generation," Mr Eldridge said.

"Significant amounts of curtailment provide incentives for storage, which we need.

"It also provides cheap generation. If you're a flexible load … there's opportunities there for you to use energy and be paid for it.