What is the state of Virtual Power Plants in Australia?

Last month, the Australian Labor party gained a majority in parliament after nine years of Conservative government, with Anthony Albanese quickly thereafter being sworn in as Australian PM.

Speaking on climate change, Albanese pledged to “end the climate wars” in the country, promising to cut carbon emissions by 43% by 2030 and boost the share of renewables in the National Electricity Market (NEM).

In fact, as of 2020, renewables only accounted for around 24% of the Australian energy mix, with coal being the largest sole source of energy, amounting to over 50% of generation.

In recent weeks, Australia has felt the impact of disruptions to coal supplies, outages at several coal-fired power plants and soaring global energy prices, leading to the country’s wholesale electricity market being suspended by the Australian Energy Market Operator (AEMO). This event is grist to the mill for Australia’s decarbonisation ambitions, which will require significant deployment of renewable energy and storage.

Growth of solar PV installations & home energy storage

An abundance of solar in Australia has already led to an increase in renewable generation in recent years – with around three million PV systems now on residential rooftops.

However, despite the many benefits of solar, this influx of photovoltaics in the country has caused issues when high solar daytime generation is met with low demand. This ultimately led to the government introducing new policies and rules, such as giving network operators the ability to remotely switch off residential solar systems as an emergency grid stability mechanism.

To combat these emergency measures, the installation of household battery systems provides a route for managing the imbalance between daytime generation and evening demand.

​​As of March 2022, around 3.5% of Australian household PV systems were paired with a battery (about 110,000), and BloombergNEF predicts residential solar systems will grow to over 600,000 by 2025. Additionally, according to the Commonwealth Scientific and Industrial Research Organisation (CSIRO), up to 60% of PV systems will be paired with a battery by 2050.

Supporting the grid through flexibility services

On top of storing the excess energy for later use, batteries can also play an essential role in supporting the grid through flexibility services.

One of the main challenges countries face when trying to increase their clean energy consumption is integrating more renewables into the grid while keeping it stable and preventing power networks from becoming congested. Given the unpredictable and distributed nature of renewable energy sources, this can be challenging.

To solve this problem and address fluctuations in energy demand, distributed, flexible resources are required. This is where virtual power plants (VPPs) come into play.

By using AI and smart technology solutions, such as Moixa’s GridShare software, distributed energy resources (like smart batteries in people’s homes) can be aggregated into VPPs to deliver flexibility services. This helps to stabilise the grid and address network bottlenecks, enabling more renewable generation to come online.

VPPs with residential assets in Australia

In Australia, VPPs with residential assets are mainly operated as part of trials to integrate the technology into the National Electricity Market (NEM). AEMO has run VPP demonstrations to test the technology’s capabilities to deliver grid services, the operational visibility of these arrangements, and the consumer experience.

These trials have focussed on ‘Frequency Control Ancillary Services’ (FCAS), which aims to maintain system frequency at 50 Hz. With rapid response times required, this service is well suited to batteries.

In addition to these frequency services, wholesale market access and distribution network services are increasingly becoming part of VPP trials in Australia to support the grid and provide additional value to asset owners.

Wholesale market access allows renewable energy generated by solar and stored by residential batteries to provide an alternative to fossil fuel generation, especially at times of high demand, so that the energy system can be less dependent on coal and gas peaker plants.

Services to distribution network service providers include the introduction of flexible exports/dynamic operating envelopes. These envelopes create live import and export limits for DERs, helping to alleviate constraints at a local level.

Creating a successful business model for VPPs in Australia and worldwide

In recent years, the development of virtual power plants is accelerating worldwide in tandem with the penetration of distributed generation. It is clear that VPPs will be a cornerstone of the smart energy networks of the future.

One of the most important goals of a virtual power plant offering is to allow remuneration for all parties while providing benefits for electricity system stability.

In this vein, a number of business models are emerging across Australia and other countries to balance value for the end customer and the VPP operator. These models include incentives for consumers (such as hardware discounts and remuneration for participation) provided by an array of entities, including energy suppliers, battery manufacturers and solution providers.

Being able to balance and optimise customer bill savings while providing VPP services is a core tenet of the GridShare platform, and is a core focus for Moixa. This is because encouraging active consumer participation is vital to achieving mass-market adoption of green, smart home technologies. Ensuring customers get a good deal from VPPs will increasingly prove essential in the Australian and global decarbonisation challenge.