AEMO seek input on Virtual Power Plant demonstration program

As Australians install solar panels at world-leading rates, the world is watching how we manage the most dramatic transformation of our energy grid to date.

Domestic energy assets like home batteries and smart appliances – as well new ways of managing demand – are creating opportunities for households to take control of their energy usage, while authorities and regulators search for ways to ensure the system works for everybody.

In November, ARENA, AEMO and AEMC launched the Distributed Energy Integration Program (DEIP), a collaboration which will see authorities, regulators, consumer associations and peak bodies from across the energy industry working together to maximise the use of distributed energy.

One of the first DEIP initiatives is looking at Virtual Power Plants (VPP) – collectives of households, coordinated with cutting-edge technology to aggregate the benefits of numerous small energy assets.

According to AEMO, Australia is hosting some of the most advanced VPP projects in the world.

In South Australia, the state government has begun a roll out of solar PV and Tesla Powerwall batteries to public housing tenants. If commercialised, the VPP could reach 250 MW across as many as 50,000 properties.

ARENA has also provided $5 million in funding towards AGL’s Adelaide VPP, which promises a chance to contribute to energy security in South Australia. AGL is currently inviting members of the public to join the program of 1,000 coordinated residential systems.

Simply Energy is also building a VPP in Adelaide that will see Tesla Powerwall 2 batteries installed in 1200 households and businesses. ARENA has provided $7.7 million in funding for the project, which is partnering with SAPN to give the local network visibility and control over the VPP, and utilises Greensync’s DeX platform.

In Canberra, the ACT Government’s Next Generation Energy Storage Program is creating a VPP capability of 36 MW by installing battery storage in 5,000 Canberra homes. The program has been supported by the Territory’s fourth renewable energy reverse auction, as part of their target of being powered entirely by renewables by 2020.

In Tasmania’s south-east corner, the award-winning Bruny Island Battery Trial is up and running, coordinating 40 systems to give the island more energy independence – particularly when populations soar during holiday periods. ARENA has provided nearly $3 million in funding for the project, which is being led by researchers from the Australian National University.

Meanwhile, state governments are launching programs to make home batteries more appealing. The South Australian and New South Wales governments each aim to support 40,000 households to install home energy storage, while Victoria is subsidising the rollout of 10,000 new battery storage systems.

If VPPs can be effectively integrated into the market, there will be two clear benefits – the people that own behind the meter assets can earn revenue for participating, and the system as a whole will benefit from avoiding the need to invest in large, expensive infrastructure.

AEMO opening the door to VPPs

To make the most of all the energy from customer owned assets, AEMO has launched the NEM Virtual Power Plant Demonstrations Program.

Projecting that consumers combining solar with battery storage could become self-sufficient for 90 per cent of their energy needs, and at times have excess PV generation or stored power available, AEMO are investigating options for distributed energy to support the broader network.

Looking to the types of services large portfolios of coordinated batteries could offer, they see opportunities for VPPs to deliver dispatchable energy, peak capacity, flexibility or ramping services, network congestion relief and ancillary services including FCAS.

Many of the challenges stem from the simple fact that VPPs don’t fit well into the existing energy market rules. Designed for the historically familiar large energy generators, greater value for all consumers could be achieved if VPPs were able to deliver more services across the full suite of energy and ancillary services markets.

Setting out to provide an evidence base to develop ‘fit-for-purpose’ regulations for VPPs, AEMO are seeking feedback on whether the VPP demonstrations’ core objectives are logical and achievable. These objectives are:

  • Allow participants to demonstrate basic control and coordination capability for VPPs providing market services in the NEM relating to both energy and FCAS
  • Develop basic systems and capability to provide AEMO with operational visibility of VPPs to understand their impact on power system security and how they interact with the market
  • Assess current regulatory arrangements affecting participation of VPPs in energy and FCAS markets, and inform new or amended arrangements where appropriate.

As well as laying out the roles and responsibilities of the various authorities, regulators and participants, AEMO provide a guide to how VPPs will operate in the market and touch on the metering and settlement of energy, as well as requirements for cyber security. The paper includes an outline of the data and information sharing requirements for participants.

Submissions closed on December 21, 2018.