Battery storageProject Consumer Energy Systems Providing Cost-Effective Grid Support
This report considers the design payments to the customers involved in the Bruny Island battery trial, for the network support provided by their batteries.
Reward structures refer to the design of payments to customers for the network support services that they provide. In the CONSORT project, we have developed reward structures that unpack the “value stack” available to distributed energy resources. In keeping with recent microeconomic reforms to the electricity sector, these reward structures implement value reflective pricing methods for network support, so align with the move to cost reflective network tariffs put in place after the AEMC’s Power of Choice review.
A solution to the problem of pricing the network support provided by customer owned batteries was found in the economic concept of the Shapley value, which was used as a template of an ideal reward structure. The Shapley value provides a principled set of properties related to network support pricing, most importantly a form of fairness (equal treatment to equal contributions and independent pricing of independent effects) and efficiency (full disbursal of the rewards available). However, since directly using the Shapley value reward structure in practice is computationally infeasible, the project developed various estimation and approximation methods. These were integrated with the NAC algorithm, and successfully deployed in the field. Analysis of the payments computed by these reward structure methods indicated that they did indeed reflect the batteries’ value to the network in principled ways, with useful findings for distribution network companies and retailers.
Despite these successes, the reward structure methods developed had varying degrees of success by practical computational metrics. One finding from the reward structures work package is that the exceptionally difficult task of calculating the Shapley value of a network support event makes it infeasible to use as a method of generating spot or even close to realtime prices, unless severe approximations of the computation are made. Additionally, although they could be deployed in the CONSORT trials, the required approximations undermine the use of these reward structure for calculating customer payments in more complicated problems of sharing multiple DER value streams, for example, when simultaneously managing network voltages as well as thermal limits.
Nonetheless, a path forward to the use of value reflective reward structures in paying for network and power system support services has been plotted based on the findings of the project. The methods developed can overlay any DER control scheme, regardless of its level of sophistication. We will continue to develop the required models and methods, and to prosecute the arguments, for value based reward structures for support provided by customer owned DER.