Australia leads the world in household solar penetration and with many solar owners now looking at adding energy storage to their systems, there are technical and policy challenges we must address for electricity grids.

In response to these challenges, in June this year, Energy Networks Australia and the Australian Energy Market Operator (AEMO) launched a joint consultation paper seeking stakeholder input on how to redesign the system. The objective is to enable better integration and coordination of solar and energy storage into local electricity networks in a manner that releases maximum value for customers.

Open Energy Networks proposes options for improving the electricity system to ensure household solar and storage can interact harmoniously with the grid.

Australia’s energy system, like those the world over, was designed as a one-way centralised flow of electricity from sources of large-scale generation to customers’ premises. Fast forward more than 100 years and the grid has become increasingly decentralised, thanks to new technology that allows households and businesses to feed power back into the grid, creating a two-way power flow.

While this presents new opportunities for customers to use energy, such as managing demand intelligently or providing access to energy markets, these changes can also pose significant technical challenges for the distribution and transmission of electricity. These challenges require changes from the networks and system operator to ensure they maintain an economical and secure system, while enabling all customers to have the opportunity to connect their systems to the grid.

To date, it has been relatively easy to predict and manage supply and demand from standard rooftop solar. However, household storage systems such as batteries have changed this, because energy flows can reverse in a millisecond and could exceed a network’s technical limits.

Energy Networks Australia CEO Andrew Dillon said Australia led the world in household solar installations and many of those customers were now adding storage to their systems as costs came down.

“From a network point of view, when the sun’s shining it’s relatively easy to predict how much electricity solar panels are generating, and therefore what is being injected into the grid at any point in time. However, when you start talking about adding storage, you’re talking about a totally different story,” he said.

“Customers with solar and storage can have various reasons for wanting to charge their batteries at certain times of the day and inject back into the grid at other times of the day. It could be in response to a wholesale price signal or a possible weather event, but if it is not coordinated with the network, it could lead to significant technical challenges.”

Mr Dillon said without coordination, there could be voltage and frequency issues or even localised outages, which had occurred already in some areas.

“We certainly don’t want to see networks having to say to customers, sorry, you can’t connect, we are at full capacity – and we don’t want networks having to spend significant amounts of capital just to accommodate solar for certain periods of the day,” he said.

“The way to avoid all three outcomes is to optimise and coordinate these distributed energy resources (DER). So it’s finding a regime that can incentivise people who have solar, and particularly storage, to allow their systems to be utilised in a way that helps the network and can avoid the capital expenditure, rather than creating more.”

The 2017 Network Transformation Roadmap Report that Energy Networks Australia produced with CSIRO identified that getting optimisation right to ensure solar and storage work in harmony with the electricity system could avoid some $14 billion worth of investment, and lower household electricity bills by $414 a year.

Mr Dillon said this was the only solution that made sense and it was no accident that the Open Energy Networks consultation paper had been jointly produced with AEMO.

“Distribution networks have a vested interest in grid security and stability and operation at a local level. However, the system operator, AEMO has similar concerns at a system wide level. AEMO needs to harness storage at a local level and be able to use it to inject into the grid at various times in a managed and coordinated fashion. This is not currently possible, as they have no visibility of distributed energy resources at the distribution level,” he said.

One way to manage some of the excess generation into the distribution system is through demand response schemes. In Queensland, Energy Queensland is moving traditional off-peak hot water, that’s programed to come on at night, to the middle of the day to make it a ‘solar sponge’ to avoid zero or negative demand in those areas that have significant solar penetration.

This type of management can be applied to existing load like hot water, pool pumps and freezers. Mr Dillon said this was a smart way to ensure energy wasn’t wasted.

However, demand response schemes will only solve some of the system challenges that must be addressed. Rather than imposing limits on customers, optimisation can help provide financial incentives to coordinate all elements of the system to work together. This will provide a safe and reliable integration of increasing levels of household solar and storage into the grid, while also providing customers with a significant opportunity to reduce power bills and gain new value from their investment in DER.

“The aim of this consultation is to start a conversation with all key stakeholders to get some broad agreement, at a high level, on the sort of functions and frameworks we need to start managing this,” he said.

“We need answers to questions about how we appropriately forecast short and long-term energy demand on our systems. We must ensure they are coordinated to get the best out of the resources, minimise duplication and over-investment and consider what this means for the roles of networks, AEMO, aggregators, retailers and customers. It is an ecosystem of different parties and we are working to make sure the system can function for everyone’s benefit.”

To deliver this new functionality, there are several ways the system could be designed and delivered. The Open Energy Networks Consultation paper identifies three potential framework options that could deliver the required functionality. They are:

The single integrated platform – which would be an extension of the wholesale market, and would use a set of standard interfaces to support the participation in the integrated multi-directional market by third parties (i.e. retailers, aggregators etc.)

The two step tiered regulated platform – where there is a layered distribution level platform interface operated by the local distribution network and an interface with AEMO, with distribution networks providing an aggregated view per the transmission connection point taking into account local level system constraints

The independent platform – where an independent body separate to AEMO or the distribution network, would work with the local network to optimise dispatch of DER based on local system constraints and provide aggregated bids to AEMO for incorporation into the wholesale market

During the consultation period, Energy Networks Australia and AEMO held stakeholder workshops in Sydney, Melbourne, Perth and Brisbane to explore multiple business models and approaches.

Energy Networks Australia General Manager of Network Transformation Stuart Johnston said engagement had been exceptional, with fully subscribed workshops.

“We saw peak bodies, regulators, government departments, consultants, educators, community groups, network businesses and industry bodies come together to discuss their views and strategies on Open Energy Networks and help us co-design our future platform,” Dr Johnston said.

“This is a complex issue and extensive consultation is essential – which is why we extended our engagement period from seven to eight weeks. This consultation has given us a platform to navigate a way forward, outline next steps and explore ongoing opportunities to collaborate.”

This process is the first stage in a 12 month project to develop an agreed pathway to design the platform required to deliver Australia’s energy future. 

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