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Who should control household rooftop solar and batteries?

By Giles Parkinson / Reneweconomy / 15 June 2018 

Image Above: Global rates of electricity market decentralisation

Australia has one of the highest rates of rooftop solar uptake in the world, and with the addition of battery storage, and yet more rooftop solar, it is going to be leading the world – by some distance – in the ratio of decentralised energy.

According to the Australian Energy Market Operator, some 45 per cent of the country’s electricity supply could come from decentralised energy (DER), and that level could be reached within just 15 years as more homes and businesses install solar and batteries, and demand management becomes widespread. (See graph above).

AEMO is comfortable with, and even encouraging of, these levels of distributed energy, and says they could help save on network upgrades and reduce the need for expensive peaking plants.

But to take advantage of these opportunities, AEMO and network operators argue that these resources need to be visible, and they need to be orchestrated, or controlled. The question is, who gets to do this?

To canvass these options, AEMO and Energy Networks Australia have released the Open Energy Networks Consultation Paper, and as we foreshadowed last week, it considers three different conductors of this orchestra of solar, storage and demand management: AEMO, the networks, or a third party.

More on that below.

First, however, it’s important and pleasing to note that this paper does not include the hyperbole about “blackouts” that marred discussion about this issue at last week’s ENA conference.

Our summary of those claims – What’s behind scare campaign on rooftop solar blackout threat – inspired more direct feedback to RE than any other story we have written since we launched this website in 2012.

Clearly, this is an important issue – not least for what’s at stake for consumers and the solar, storage, and smart software sectors, but also for the differing views about what’s possible within a smart grid.

And they don’t want to see discussions or outcomes derailed by scare campaigns, particularly when it comes to the issue of equity about control and ownership of distributed assets, which usually belong to the consumer.

The paper recognises that this transition is unstoppable, with the uptake of rooftop solar expected to surge from current levels of 7GW to more than 20GW by 2035 (at current rates it will be a lot quicker than that, given high energy prices and the general customer dissatisfaction with energy utilities.).

AEMO says it does not seek to stop it, but it insists it must be managed. Right now there is not enough clarity on what is where, and what it is doing, and when and why.

Without proper management, the paper warns, customers will suffer because the output of household PV will be constrained, restrictions will be imposed on where rooftop solar can be installed, and network costs will rise. Some might say that already occurs.

It notes that in states like South Australia, with extremely high levels of rooftop solar generation, and where rooftop solar production could match grid demand on some days by 2025, un-managed rollout could result in widespread constraints by 2021, and other more dramatic interventions in following years.

But this is without demand management and battery storage and VPPs, which should happen anyway.

The paper notes that if rooftop PV systems transitioned from being “passive” to “active”, this would help address the challenges, and what it calls “feed-in” management (which, I think, means curtailment) would occur less than 1 per cent of the time in 2025, and less than 4 per cent in 2035.

It further notes that blanket restrictions are highly inefficient because passive DER tends to only cause issues for “relatively small periods of time” in the network or system, and will typically be limited to mild Spring weekdays, and only in certain parts of the network.

With proper orchestration, the paper argues, citing a study by the ENA and CSIRO, the savings could total $158 billion by 2027, or half the value of network investments by 2050, and deliver savings of more than $400 a year.

It splits the distributed technology into two categories: active, which relates to rooftop solar systems; and passive, which relates to batteries and other smart technologies.

Both have issues, including batteries, because they are less predictable. AEMO sees this as an issue with virtual power plants, some of which could present a potential demand swing of 500MW in the case of the proposed Tesla VPP in South Australia. AEMO wants to get visibility – and some control – of what such VPPs will do and when.

Without it, the paper warns, customers will suffer. With proper orchestration, the paper argues, citing a study by the ENA and CSIRO, the savings could total $158 billion by 2050, or half the value of network investments.

“DER can provide demand shifting, load and resource balancing and become an integral part of a reliable, lower cost, secure system,” the paper says.

“Incorporated into AEMOs current optimisation process, VPPs will reduce the need for peaking plant and enhance system level resiliency.”

One of the big issues is whether aggregators of these resources have direct access to the wholesale market alongside existing generation resources.

These might be made through aggregators, retailers, virtual power generation platforms and in sub-markets that include peer-to-peer trading that utilise block chain technologies. Already, you can sense the tension here between network operators and the traditional gen-tailers.

The question is the platform, and who gets to be the “Distributed System Operator”, or DSO. (If you ever need someone to host an acronym party, just ring up a network or energy regulator).

The paper suggests three possibilities.

The first is a single integrated platform (SIP), managed by AEMO. It says this would be able to “simultaneously solve local security constraints and support wholesale market entry.”

The second option is a “layered” platform, run by local networks, that links with an AEMO platform. Called the “Two Step Tiered Regulated Platforms,” this would allow bespoke approaches by individual networks, but may end up being complex.

The third approach is an “independent DSO”, as proposed in the US, but the paper does not seem keen on this because of the potential complexity and cost of setting up yet another energy institution.

The organisations are looking for responses by early August, which will then lead to a “white paper”.  AEMO is preparing for a response as strong and diverse as the 80-something submissions to its Integrated System Plan.

The response should be fascinating. Not just from networks, retailers and players in solar, storage and smart software industry, but also consumer representatives.

 


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