by Charles Rattray, Executive General Manager, Yurika, Energy Queensland
Energy Queensland’s new business Yurika has built Australia’s biggest Virtual Power Plant. Here, Executive General Manager, Charles Rattray, explains why it is a game changer for the industry, market participants and customers.
In listening to customers and visiting communities from the Torres Strait to Tasmania, it is clear to me that affordability is the biggest issue. Before we can work out the most cost-effective, innovative and simple energy solutions, we need to speak with customers to understand their challenges.
One solution is to reduce their overall demand or energy usage at high price times. We have an innovative solution that works – a Virtual Power Plant (VPP). VPPs save customers money by avoiding some demand charges, avoiding peak price events or by selling their capacity into the wholesale market for additional revenue or to support networks in some areas.
Virtual Power Plants (VPPs) help to optimise distributed energy resources (DER) to maximise their value for the VPP user and provide other market benefits, taking into consideration the operational constraints of the underlying DERs, the prevailing markets and physical condition of networks.
In the Yurika VPP, we utilise a cloud-based, load control platform which provides visibility and remote control of DER, connected to the VPP through Internet of Things devices. There are a number of different software platforms in the market. We opted for Australian company GreenSync’s technology, which is DER agnostic.
Most VPPs have effectively been born out of a fleet management system for whatever kind of asset they have been asked to switch. It is a logical evolution from fleet management to a VPP.
Recognising the need for DER and devices that support them, engineering companies built physical devices in order to fill a gap in the market.
It soon became clear that those assets were worth more coordinated together, not only in terms of value but also in the additional services they could offer. All of a sudden, the product offering has had to become more sophisticated.
If you had a choice between a battery that could be installed, but you had to go out and check on it every six months, or a battery that was internet connected which you could monitor and control as frequently as needed and understand how it was performing or remotely re-configure it – there is clearly a lot more value for the user in the second option.
A balancing act
The value of a VPP, compared to a regular power plant, is the cost of acquisition and that it utilises assets that have already been purchased and deployed.
At the end of the day, both regular power plants and VPPs are trying to help balance supply and demand. A VPP is used to increase supply through smaller assets rather than large power stations, or decrease demand in terms of curtailing load.
The net impact on the system is the same, albeit with lower capital requirements, and the VPP allows you to aggregate many smaller devices, which may be more economic for the end customer than the large capital requirements to build a regular power station.
There are clearly environmental benefits as well. Most traditional power stations are currently burning fossil fuels, be that gas or coal or some other fuel, whereas most VPPs can assist with the uptake of renewable technologies.
AGL’s decision to close the aging Liddell Power Station in 2020 is a sign of the times. Regardless of the politics, regardless of the environmental issues, from an economic point-of-view it is fast becoming cheaper to roll out grid-scale renewables and soon battery storage will be widespread.
Because of the inherent intermittency of wind and solar, we need to balance them out with flexible loads in addition to the use of storage. As the supply fluctuates due to environmental conditions, we can tap into additional generation assets, like storage, or reduce demand through industrial processes, agricultural processes and smaller things such as air-conditioning systems or pumping loads.
The real advantage of pairing those two things in a VPP is that you can actually create a much firmer generation product because you can remove the intermittency associated with those assets, firming up that portfolio over time.
Ensuring future connectivity
The future is about bringing as much flexibility into the grid as we possibly can to support renewables. VPPs require and complement the grid.
Furthermore, a significant strength of a VPP is that it aggregates loads and supply which have disaggregated locations. It’s made up of individual DER working in a coordinated way, and the only way they can be coordinated is if they’re physically connected.
That is where the grid comes in – that’s the physical connection, that’s how we tie this whole thing together, it is a physical system. It is the physics of the electrons powering our society. You need that physical connection in order for it to work.
That’s why the future of the distribution business is incredibly bright, albeit in newer ways as new markets emerge. Those networks will effectively form the internet of energy.
I cannot see any major roadblocks and certainly no technical impediments to the success of VPPs in bringing value to communities. It’s really about how quickly large companies in our sector can get their heads and strategies around evolving towards where the future is going.
For Yurika, part of the Energy Queensland Group, innovation is a core value. Our core business is the safe delivery of affordable, reliable and sustainable energy solutions, in partnership with our customers and communities. I see this ground-breaking VPP as a shining example of both, and a beacon for the energy industry.