Intelligent technology enabling Australia's energy transition
Australia is at the forefront of the global energy sector’s shift from fossil-based systems to renewable assets and the way in which energy is consumed. For residential and small business consumers in Australia, this has mainly meant installing solar PV on their rooftop. However, there is a misalignment of consumer behaviour in using the generation of solar PV leading to excess energy being exported to the grid. This is great in theory but the physical realities of the grid mean that exporting energy is a significant issue for networks and market operators to manage.
VPPs can increase grid reliability
Virtual power plants (VPP) and cloud services are leading the way to providing solutions to the issues at play. To be most effective, these solutions need to be considered by regulators and networks in ways that lead to increased participation by owners of renewable energy assets, allowing for value to be recognised and shared with participants, increasing the overall utility of the grid.
VPP technologies are required to enable an increasing number of duty cycles for enrolled assets. Australia has seen the introduction of Remote Disconnect Reconnect in SA in 2020, Emergency Solar Management in WA in 2022, Dynamic Exports in SA in 2023, Queensland Backstop in 2023. Each of these is driven by regulatory requirements to help secure the network from excess solar PV export at times of low-load volume. Without this, networks become constrained and face potential stability issues.
VPP technologies have been deployed as the technology to respond to this extension of static compliance requirements enabling dynamic and interoperable connection between behind-the-meter (BTM) assets and front-of-meter (FOM) grid. Without VPP technologies, the hosting capacity of the networks would be reduced, lowering export limits, and the community would lose access to the value of the clean energy produced.
Aggregation software is often limited to the number of assets that can be enrolled to VPPs. There is a plethora of OEM systems deployed across Australia’s 3.4 million sites with rooftop solar.1 Many installed systems have been and continue to be unsophisticated systems unable to work with VPP services, requiring third-party gateways to be installed where available. These are at considerable cost to the system owner and payback can be questionable.
Leading OEMs are shifting to native systems. These are inverter units that are intelligent hubs, enabling aggregators and retailers to aggregate the assets into a VPP, meet dynamic compliance requirements and take advantage of value pools that can be shared with the system owner. The major benefits of native systems are that the OEM produces the most efficient and wide-ranging series of API and/or control processes, without additional investment.
VPPs about accessing value
AEMO’s 2022 Integrated System Plan2 indicates the scale of the role that VPPs and other emerging technologies will have to play by 2050, expecting in the order of 31 GW of dispatchable capacity to be managed by these technologies. Bloomberg NEF3 stated earlier in 2022 that there were 61 VPPs operating in Australia, with the majority servicing BTM energy storage capabilities.
There is a gap between the expected scale of future VPPs and the current state of engagement. Much of this gap comes from a limited access to value. Three key areas of value exist for VPPs:
- Wholesale market: VPPs have, in the main, created value by trading in the wholesale markets since inception, looking to either take advantage of windfall pricing or limited arbitrage opportunities.
- Frequency Control Ancillary Services (FCAS) market: More recently FCAS markets have been opened with trials operated by AEMO, though the follow-up change to the specification has meant few new OEMs have FCAS-enabled systems ready for VPP participation.
Network services: These are yet to come to market where networks recognise the value of VPPs to their operations and the ability to play a stabilising role for the network. Change here requires a change in thinking in networks as well as regulation.
Having access to all three value pools will improve the return on investment for system owners, developing an expected growth in VPP offers.
The future is bright
AEMO’s ISP scenarios are achievable. We need the right mix of technologies, regulation and value pools to bring VPPs to their full potential. The community in Australia has been clear in their view based on the significant investment in renewable energy; now we need to make this work together to the benefit of the full utility of the energy network.
1. 1/3/2023 Rooftop solar poised to become Australia’s biggest power source amid coal’s demise, Daniel Mercer, ABC News https://www.abc.net.au/news/2023-03-01/rooftop-solar-to-overtake-coal-as-australias-main-power-source/102033740
2. June 2022, 2022 Integrated System Plan for the National Electricity Market (pp10, 39, 50), AEMO
3. 4/4/2022 Australian Virtual Plants Struggle to Meet the Hype, Wil Edmonds, Bloomberg NEF
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