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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.

AEMO’s Virtual Power Plant Demonstrations Program consultation paper can be found here.

Submissions close on December 21, 2018.

Top marks for new off-grid solar classroom

The school bells have rung and class has started in Australia’s first 100 per cent solar and battery powered relocatable classroom.

Building on the success of Hivve’s first two solar portables installed at Dapto High and Sydney’s St Christopher’s Primary, a third renewable energy powered classroom has opened at Bracken Ridge High School in suburban Brisbane.

Unlike the first two solar Hivves, the newest classroom will be entirely powered by solar and batteries and won’t be connected to the electricity grid.

Hivve co-founder Richard Doyle said taking the solar classrooms off-grid was “an absolute no-brainer.”

“Demountables are often put in as a temporary solution and remain permanently. The Hivve has been designed to replace that model in a sustainable and smart way,” Richard Doyle said.

Faced with a bill of more than $35,000 for a grid connection, the decision was made to install a Tesla powerwall and only connect the classroom to the school to share excess solar power produced on-site. Based on data gathered from the two Hivves, it’s expected that Bracken Ridge High’s new high-tech portable will produce enough energy to power two additional classrooms.

With an energy profile perfectly matched to the demands of a school day, Doyle said the solar setup is pushed hard to “maintain a temperature of between 20-24 degrees during the school day.”

He sees an opportunity for their technology to be rolled out widely following a pledge from the New South Wales Government to spend $500 million installing air conditioning in 1,000 schools.

“We’re collecting performance data for these buildings to show how Hivve can deliver that with no impact on the grid,” he said.

Doyle says the model is also well-suited for use in remote communities.

ARENA has provided nearly $370,000 to the three classroom pilot program which Hivve developed in collaboration with Tesla. ARENA CEO Darren Miller says the program opens the door for more Australian schools to switch to renewables.

“Demand for energy at schools occurs during the school day, when the sun is shining. There is a great opportunity to power classrooms via solar, backed up by battery storage,” Darren Miller said.

Rapidly growing populations and the rising popularity of solar is pushing transmission infrastructure to the limit, giving the new off-grid setup extra appeal.

“Many schools on the Eastern seaboard are currently at capacity on grid connection. This Australian-developed solution could help schools reduce costs and emissions, while also reducing reliance and demand on the grid,” he said.

“This solar-and-battery powered Hivve classroom at Bracken Ridge is both sustainable and self-sufficient as it powers itself while being completely off grid. The school avoids the significant upfront cost of grid connection while also saving on ongoing energy costs,” Mr Miller said.

Benefits being shared with existing buildings

According to Hivve, the oldest relocatable classroom in New South Wales was built in the 1960s.

The new modular portables have lessons from their old, poorly insulated and ugly forebears, designed for the long-term with the realisation that demountables are often put in as a temporary solution that remains permanently.

With each Hivve able to generate around 7600KWh of solar power every year in addition to its own requirements, the state of the art classrooms will reduce their host school’s reliance on grid power and bring down electricity bills.

Dapto High School’s Hivve

They can also help to create a healthy environment for learning by measuring CO2 levels and alerting teachers when air quality deteriorates. Fresh air can be introduced through the heating/cooling system, or by opening a window.

While the new Bracken Ridge Hivve won’t be connected to the grid, all of the excess solar energy it produces will be captured on-site with a behind the meter connection to other school buildings.

The ARENA funded pilot will run for 12 months and data collected will be used to demonstrate how renewable energy could power schools.

Harnessing the power of consumer energy

The Australian Renewable Energy Agency (ARENA) has announced a major new initiative that will see the whole-of-the-energy industry working together to harness the potential of consumer owned energy.

Distributed Energy Resources (DER) are the vast array of decentralised, consumer-owned small scale energy technologies that sit “behind the meter” in homes and businesses including rooftop solar, home batteries, smart appliances, smart thermostats or pool pumps and charging points for electric vehicles.

According to CSIRO and AEMO forecasts, up to 45 per cent of all electricity generated in Australia will be coming from DER by 2050, compared to just 3 per cent today.

The Distributed Energy Integration Program (DEIP) is a collaboration of energy peak bodies, market authorities, industry associations and consumers associations to maximise the value of customers’ distributed resources for all energy users.

The joint initiative will involve ARENA, Australian Energy Market Operator (AEMO), Australia Energy Market Commission (AEMC), Australian Energy Regulator, Clean Energy Regulator, Energy Consumers Australia, Clean Energy Council, Australian Energy Council, Energy Networks Australia, CSIRO and Clean Energy Finance Corporation.

To deal with the expected increase in uptake of rooftop solar, home batteries and other technologies – such as smart appliances and electric cars – over the coming decades, changes are required to system planning, operations, markets, regulatory frameworks and industry business models.
The DEIP will work together to coordinate the rollout of initiatives aimed at growing the penetration of DERs in Australia through improved cost and time efficiencies, informing energy consumers and supporting development of innovative business models.

ARENA CEO Darren Miller said bringing together key stakeholders in the energy sector would help to ensure quicker and more effective integration of DERs.

“Australia is at the global forefront of the adoption of distributed energy, and will have one of the most decentralised energy systems in the world in the coming decades.

“There are currently over 1.8 million rooftop solar systems already installed in Australia, and this is only expected to grow as more Australians install home batteries, home energy management systems, smart appliances and start driving electric cars.

“The uptake of these technologies is only expected to grow which is why we need to grapple with the implications of this now,” he said.
DER has the potential to support a reliable, affordable and lower-emissions electricity grid, Mr Miller said.

“Rooftop solar, home batteries and other behind the meter technologies are going to reduce energy costs for the consumers that buy them, but this is a huge disruption to the traditional management of the grid and operation of the electricity market,” he said.

“DEIP’s whole-of-industry approach will ensure we share ideas, knowledge and resources. By bringing together key industry, government bodies and consumers, we will ensure that everyone is on the same page and agrees on the best way to integrate consumer energy into the grid and transform our electricity system into a two-way street,” he said.

ARENA’s funding will support a wide range of initiatives in partnership with other agencies to address technological challenges, regulatory and market barriers and consumer issues.

“A key challenge in this transition is ensuring that consumer-owned assets help support reliable and secure system operation, and that fair value is provided back to customers for their investments,” Mr Miller said.

“We look forward to integrating DER in a way that maximises consumer value through price, greater choice, and the provision of a secure and reliable system,” AEMO Managing Director Audrey Zibelman said.

“The future power system will see more consumers buying and selling energy in a dynamic way in response to price signals. The AEMC is adapting regulatory frameworks so consumers can optimise the value of their investments in distributed energy resources. This can help consumers manage their bills, while also providing more options for AEMO to keep the system secure and reliable,” said AEMC Chief Executive Anne Pearson.

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EDITORIAL: The Distributed Energy Revolution

If millions of Australian households and businesses continue to invest in their own solar and battery systems, this vast array of small scale energy assets known as Distributed Energy Resources (DER) could create enormous disruption to the electricity system.

While this creates opportunities for consumers, it also creates challenges for incumbents – the market, its operator, regulator, generators, retailers and networks. If utilised to our collective advantage, DER could make the system more resilient and affordable, but it could also make the system more unstable and expensive.

With forecasts that up to 45 per cent of our electricity will be generated by consumers within two decades, DER is set to transform our energy system… for better or worse.

A revolution is underway in the energy sector. The transformation is not just happening at grid scale, but also on the “customer side of the meter” in households and businesses. In the decades to come, it is increasingly clear that as well as being renewable, the future of Australia’s energy generation is going to be small-scale and highly distributed.

While much of our current energy debate is focussed on the transition of grid scale generation from coal to wind and solar farms stretching across the countryside, and on grid scale storage like big batteries and pumped hydro, Australian households and businesses have been busily changing the way they use energy.

Ten years ago, there were just 14,000 rooftop solar units across Australia.

Today, 1.8 million Australian households have solar panels on their roofs.

In the last decade, Australians have embraced rooftop solar so enthusiastically that we are now the biggest rooftop solar adopters per capita in the world.

And that is only increasing. Rooftop solar installations hit a new record in the March quarter with a monthly average of 127MW installed, up 56 per cent from the same time last year. Rooftop solar installations are running at an annualised rate of more than 1300MW.

An estimated 1 GW of rooftop solar was installed across Australia last year. For the first time, rooftop solar throughout Australia generated over 1000 GWh in a month –  December last year.

The uptake of rooftop solar PV among commercial and industrial customers is also increasing apace with business volume recently outstripping residential customer capacity.

At present, rooftop solar generation accounts for just over 3 per cent of our generation.  By 2050, it is estimated up to 45 per cent of Australia’s electricity will be generated from solar PV on rooftops. According to AEMO’s forecasts, 25 to 40 per cent will be coming from rooftops by 2040.

ARENA CEO Ivor Frischknecht with UNSW Scientia Professor Martin Green

However, deployment of solar PV is not uniform across Australia. AEMO predicts that by 2025 at certain times of day South Australia may be entirely powered by rooftop solar. While it is exciting to see this high penetration of renewables, this presents significant operational challenges that need to be overcome to ensure affordable, reliable, stable electricity.

A growing number of Australians are also adding home batteries, which Chief Scientist Alan Finkel called “the next logical step”.

In 2017, the number of residential battery systems installed trebled from the previous year. Almost 21,000 battery systems were installed in Australian homes in 2017.

As the price of residential batteries falls and batteries become more efficient, more Australian households are expected to adopt them – particularly those that already have solar on their roofs.

While grid scale generation and storage will always be needed, this increase in DER represents a huge disruption for the National Electricity Market to grapple with.

On the other hand, it also represents a huge, untapped opportunity to make these DER work for the system, rather than against it.

AEMO faces the challenge of balancing supply and demand, and power flows system-wide. In the past it was relatively easy to predict household demand, but the task of predicting household demand becomes harder if millions of households have solar and batteries that the market operator has no visibility over.

In their Open Energy Networks consultation paper, AEMO and Energy Networks Australia warned that customers will suffer if no action is taken. The quality of electricity may degrade, which in the case of voltage spikes could shorten the lifespan of electrical appliances or cause them to trip off. If households face constraints over the amount of electricity they can export back to the grid it will take longer for them to pay back the cost of installing solar and batteries.

In some parts of Australia it is normal not to allow households or businesses to export surplus solar energy to the grid. In some areas, permission to install solar PV could be denied altogether if their street is overloaded. Power bills could rise if distributors makes investments to enable more DER to connect. Thanks to the national accreditation scheme for rooftop solar, we can track where rooftop solar is installed but we have no visibility over how much electricity is being generated. Rooftop solar is not currently monitored or coordinated, so we can’t optimise its output the way we can with grid scale assets.

Batteries present an even greater challenge. With home batteries, there is no accreditation scheme so we don’t have visibility on how many batteries are installed, where they are located, or what their state of charge is. Except through trial programs, we also cannot control their dispatch, which limits their usefulness to the broader grid.

Apart from solar and batteries, there are other technological innovations that are coming that will change the way we use electricity in our homes and businesses. More Australians will be driving electric vehicles that they charge in their homes. The Internet of Things will allow appliances to be automatically optimised for energy efficiency, and smart thermostats and smart pool systems will become the norm. There are already sophisticated home energy management systems able to respond to signals from the grid to optimise their energy use.

One day not too far from now, millions of Australia homes might have solar on their rooftops, a battery system, a charging station for an electric car, smart appliances and an energy management system that are all connected and collectively able to be harnessed.

If we orchestrate them collectively, these small scale assets would reduce the need for network infrastructure, and consequently cut our electricity bills.

Energy Networks Australia’s Electricity Network Transformation Roadmap released last year with CSIRO, estimated that this could be worth $1.4 billion in avoided network investment, which would result in lowering household electricity bills by $414 a year.

These small scale assets would displace the need for some grid scale power stations and storage. Virtual power plants (VPPs) involve aggregating and coordinating individual rooftop solar, batteries and other DER assets so they can combine to provide dispatchable power, just like a peaking power plant.

However, if we don’t enable these assets to be monitored and optimised, it creates the potential for a future Australian electricity system with limited centralised visibility, more instability and the need for new network infrastructure to balance this. This may in turn lead to even higher energy costs than Australians are already paying.

While those lucky enough to afford their own rooftop solar and storage would experience cheaper energy costs and would be largely self sufficient in the grid, this could be at the expense of others who cannot afford their own solar and storage who would bear the cost of network upgrades built into their power prices.

All of this can be avoided.

There needs to be a massive enablement of rooftop solar, batteries and controllable loads so they deliver benefits back to the system as a whole, with participation on a voluntary basis.

This will include more ways to sensibly manage demand, including better incentivising the use of demand side resources as happens in other markets from Texas to Taiwan.

If consumer energy assets can be orchestrated and optimised so as to work harmoniously, distributed energy resources could save consumers money on their power bills, reduce the need for network infrastructure, help deliver grid stability services and inject dispatchable power back to the grid when and where it is needed.

To deliver this, there are certainly technical challenges to overcome. However, this shift to distributed energy also creates commercial issues and regulatory challenges.

We need incentives for people to allow access to their solar and battery storage devices and appliances. We need new business models to drive this innovation so it is seamless and automated. We need new market rules to allow these unregulated assets to be properly valued as part of the energy mix.

Retailers could become the future orchestrators of consumer energy, but at the moment their business model is to sell electricity to customers.

Networks also have an important role to play, but existing networks make money through regulated returns from expenditure on grid infrastructure.

In the US, cable companies are becoming new consumer energy enablers. In Australia, it is conceivable that this “energy enabling” might be done by startups, telecommunications companies, or it could be a service offered by tech giants who are moving into home automation technologies.

AEMO and Energy Networks Australia’s Open Energy Networks report proposes measures to improve the way distributed resources are integrated. Along with recommendations to remove barriers to DER providers and VPPs being involved in the central dispatch process, AEMO suggests DER monitoring and management standards should be developed.

Already, ARENA is supporting a wide range of studies and pilot projects that look at how to optimise consumer energy.

These include:

  • AGL’s VPP in Adelaide involving aggregating 1000 batteries in households and businesses;
  • Simply Energy’s VPP which involves installing batteries in 1200 households to deliver 6MW of capacity, along with 2MW of demand response from commercial businesses;
  • A feasibility study into a “virtual microgrid” run by LO3 Energy in the Latrobe Valley which would consist of a local energy marketplace of 200 dairy farms, 100 households and 20 commercial and industrial businesses;
  • ARENA and AEMO’s three year trial of demand response involving 10 pilot projects across NSW, Victoria and South Australia;
  • And, Sydney boutique energy retailer Pooled Energy’s trial which involves controlling and optimising the energy usage of 5000 backyard swimming pools.

In March, ARENA also announced a $12.5 million DER funding initiative. Under this initiative, ARENA has called for pilot projects to look at improving network hosting capacity and for studies to look at improving orchestration and integration of high levels of consumer energy.

It is too early to say which new business models or new technologies might ultimately be the best way to enable and integrate distributed energy, but one thing is certain: we cannot afford to ignore the customer side of the equation.

Even the phrase ‘behind the meter’ is antiquated, as it draws a line between the customers and the rest of the energy system. It frames the whole electricity system from the perspective of the traditional industry players – the retailers, networks and generators – instead of from the customer’s point of view.

After all, what’s behind the meter all depends on which side of the meter you are standing on and which way you’re facing. From the Australian household’s point of view, the whole electricity system is ‘behind the meter’ – not the other way around.

In a future where the customer side of the equation has a bigger role to play in delivering supply and managing demand, our current industry-centric view of the system has to change.

Instead, we need to think about the energy system holistically – and that includes finding ways for household solar, batteries and appliances to be utilised for the benefit of the system as a whole.

Ivor Frischknecht is the Chief Executive Officer of the Australian Renewable Energy Agency.

Revolutionising the grid: ARENA invests in Adelaide’s second virtual power plant

Extreme heatwaves put tremendous pressure on the electricity grid as demand for energy outstrips supply. As temperatures soared above 40 degrees in Adelaide in February 2017, a blackout caused by load shedding left 40,000 households without power for over half an hour.

It’s at times like these that backup generation comes into play. Typically, this may require firing up a diesel-powered turbine or a gas plant, like the one at Pelican Point in South Australia, to meet the increased need for power.

Another option is distributed energy resources (DER)-small-scale, locally generated power sources that can be amassed to form a power supply that is efficient, reliable, and cost-effective. One example is the virtual power plant (VPP), a network of home battery systems installed ‘behind the meter’.

To help drive initiatives in this space, ARENA is investing $7.8 million in Simply Energy VPP—a $30 million development that will see 1200 Tesla Powerwall 2 home batteries sold to homeowners at a subsidised price. They will then be delivered to Adelaide households with rooftop solar systems to create the city’s second virtual power plant.

“Simply Energy is proud to be able to deliver this innovative solution that helps our customers reduce their energy costs while also providing additional energy security in South Australia,” says Simply Energy CEO Carly Wishart.

“We will work closely with South Australian Power Networks to give both networks and the market operator greater visibility of behind-the-meter batteries and the ability to use batteries to manage demand and manage network constraints, reducing network costs.

The ground-breaking Simply Energy project incorporates Australia’s first digital marketplace for renewable energy, known as Decentralised Energy Exchange, or deX.

Developed by energy startup GreenSync, which was also funded by ARENA, deX allows users to buy and sell power generated by rooftop solar and stored in home batteries. After a successful pilot at two network locations in the ACT and Victoria, the Simply Energy VPP will deploy deX on a commercial scale for the first time.

The scheme’s benefits include reduced electricity bills for users as they consume solar power generated on their rooftop and sell energy back to the grid via deX during peak, high-price periods. Commercial users will have access to a more reliable energy supply, and energy companies will benefit from reduced network costs and increased grid stability.

The changing grid

Initiatives that rely on DER, like the Simply Energy VPP, signal a shift in Australia’s energy production from a centralised grid to a decentralised system incorporating more renewables.

Traditionally, the electricity grid was a vertical system that distributed energy in one direction—from the power plant to consumer.

Today, advances in technology mean that any house with rooftop solar and battery storage system can operate as an electricity generator. Link these households up, and you have a DER network that, when collectively managed, can both reduce demand and supply power during peak periods.

Aggregated DER can also help maintain the grid’s stability as more energy comes from renewable sources like wind and solar, which can be intermittent.

ARENA CEO Ivor Frischknecht says the project will further demonstrate how home batteries can be aggregated to help with grid stability, managing demand and better utilise rooftop solar to store surplus electricity.

“This deployment of a further 1200 batteries into South Australia’s grid will deliver benefits to both individual customers and energy networks and demonstrate a potential model for how distributed energy resources can be operated at large scale in the future to help reduce energy prices,” she says

“This trial will also demonstrate the commercial benefits of including a virtual power plant into a distributed energy market platform, such as deX.”

What is demand response and how does it work?

Energy retailers can increase supply—to a point—but this can be a slow and imprecise process.

During summer heatwaves, electricity consumption spikes by as much as 46 per cent. Demand response sees users reduce consumption during these peak periods to help maintain supply and avoid outages.

Users, often offered financial incentives, agree to reduce consumption during periods of high demand. In the event of a heatwave, this helps curb demand and stabilise the grid without having to rely on inefficient and costly sources of backup generation.


What are distributed energy resources and how do they work?

According to the twentieth century model of energy distribution, large power plants fuelled by coal, hydro or gas, generated electricity that was distributed via a centralised grid. Power flowed in one direction from plant to end user.

Now the picture has changed. Advancing technology has diversified the grid, adding new sources of energy generation and two-way power flows. Utility-scale wind and solar farms are supplying an increasing proportion of our power. Many Australian households generate their own electricity via rooftop solar photovoltaic (PV) panels, which can then be stored using home battery systems. Demand response and smart meters are changing the way we consume electricity, allowing users to reduce consumption during peak periods to help balance the grid.

Reliability has emerged as a major concern as the grid struggles to guarantee supply to meet increasing demand, particularly during peak periods when expensive backup generation is required to keep the lights on.

Enter distributed energy resources, known as DER: small-scale units of local generation connected to the grid at distribution level.

The arrival of DER – a source of decentralised, community-generated energy – and its two-way flow of power is transforming the grid.

DERs can include behind-the-meter renewable and non-renewable generation, energy storage, inverters (electronic devices that change DC, or direct current, to AC, or alternating current), electric vehicles and other controlled loads (separately metered appliances like hot water systems). DER also comprises new technology like smart meters and data services.

Common examples of DERs include rooftop solar PV units, natural gas turbines, microturbines, wind turbines, biomass generators, fuel cells, tri-generation units, battery storage, electric vehicles (EV) and EV chargers, and demand response applications. These separate elements work together to form distributed generation.

DER penetration is growing every year. The Electricity Network Transformation Roadmap (ENTR), a joint publication by Energy Networks Australia and the CSIRO, projected that over 40 per cent of energy customers will use DER by 2027. By 2050, that figure will grow to more than 60 per cent.

Home appliances such as air conditioning units can contribute to the makeup of DER


The increasing penetration of DER into the grid comes with a raft of benefits and opportunities for the power system and its participants.
Affordability is one. Customers with access to DER assets can expect to pay less for electricity as they sell power back to the grid or are compensated for allowing their storage systems to help stabilise the grid, especially during peak periods.

Reduced network costs could also lead to a fall in the overall cost of energy. One study found that investment in DER could reduce network expansion costs by nearly 60 per cent by 2050.

Reliability is another benefit. In areas where there is a high reliance on variable energy resources (VER) like wind and solar, DER can be deployed to help balance the grid and improve its reliability, either reducing demand or providing energy to help smooth out intermittent supply.

A limiting factor is hosting capacity, or the amount of DER which can be connected to a distribution network and operated within its technical limits. DERs can be incorporated into the grid where no threats to safety, reliability or other operational features exist and no infrastructure upgrades are required. In many cases, however, grid modernisation is necessary to safely integrate DERs into the network.

California offers a useful case study in DER development. The state is a leading solar producer: rooftop solar penetration is more than 7 percent, and in 2015, 10 percent of California’s energy came from a combination of solar thermal, utility-scale PV and rooftop PV. By 2030, 50 percent of the state’s power will be supplied by VER (wind and solar).


ARENA is allocating more than $12 million in funding to optimise investment, improve system performance and reduce technical, market, and regulatory barriers to increased uptake of DER in Australia.

The funding will be invested in network hosting capacity technology and demonstration projects to develop new ways to understand and manage the impacts of high DER penetration in different parts of the distribution network. This will allow networks to connect more DER (such as rooftop solar PV panels) cheaper and faster while reducing costs and operating within the technical limits of the power system.

Another slice of funding will be allocated to new studies or models that contribute to increasing the value, capacity or efficiency of DER, or reducing costs or risks associated with its development and application.

These studies will help networks, retailers, government and system operators understand more about the technical and commercial challenges of managing a grid with a high penetration of DER. This could include identifying new ways of managing energy flows, better understanding how consumer behaviour might influence DER take-up or developing local or time-of-day incentives to encourage the use of DER.

For further information and to apply, visit the DER funding page