FEBRUARY 2019

DISTRIBUTED ENERGY INTEGRATION PROGRAMOVERVIEW / DEIP AT A GLANCE

Distributed Energy Integration Program Distributed Energy Integration Program2 3

The need for change 4

What is DEIP? 5

DEIP Principles 6

Collaboration 7

DEIP Framework 8

Customer 9

Markets 10

Frameworks 11

Interoperability 12

How to get involved 13

Contents

Distributed Energy Integration Program Distributed Energy Integration Program4 5

The need for change What is DEIP?

or 7.5 GW) is already impacting traditional

grid management practices and market

frameworks.

Therefore, the review recommended that

the Council of Australian Governments

(COAG) Energy Council consider the regulatory

framework, data exchange mechanisms

and incentives to integrate DER. It also

noted a critical role for proof-of-concept

demonstration projects and the importance

of greater collaboration across industry

and market institutions.

Australia’s energy sector is at a critical

juncture and it is evident that a significant

industry-wide transformation is required to

deliver a sustainable electricity system that

meets customer expectations.

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Batteries

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Customers’Distributed

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The Distributed Energy Integration Program

(DEIP) is a collaboration of government

agencies, market authorities, industry and

consumer associations aimed at maximising

the value of DER for all energy users.

Led by a steering group (see Figure 2) the

forum supports DER information exchange

and collaboration to efficiently identify

knowledge gaps and priorities and to

help accelerate reforms in the interest

of customers.

To achieve this, the steering group has

identified the need for a shared vision across

the sector as well as agreement on key

priorities to address issues associated with

the continued and rapid uptake of DER.

A key element of DEIP is to facilitate

demonstrations and research that can

help to inform potential changes to fully

integrate DER into Australia’s energy market

frameworks and operational processes.

Australia’s early adoption of DER and rising

customer interest in new technology

positions it to be a global leader in the

efficient integration of DER. A willingness

of all stakeholders to adapt positions is only

possible through effective collaboration,

and DEIP provides a unique opportunity for

industry and governments to work together.

Figure 2 – DEIP Steering Group Members

Figure 1 – Customers’

Distributed Energy

The growth of customer-owned energy

technology such as rooftop solar, batteries,

demand response and electric vehicles

(collectively referred to as distributed

energy resources or DER) has the potential

to support a reliable, affordable and lower-

emissions electricity grid. DER could supply

almost half of Australia’s electricity by 2050.

The Independent Review into the Future

Security of the National Electricity Market

identified that making best use of DER

could avoid significant future infrastructure

expenditure, reduce electricity costs for all

customers, while also enabling a transition

to a decarbonised electricity system.

The rapid uptake in rooftop solar systems

in Australia (more than 2 million households

Distributed Energy Integration Program Distributed Energy Integration Program6 7

OBJECTIVES

DEIP has the following objectives:

Target greater collaboration, research,

knowledge sharing, demonstrations

and resources.

Apply the DEIP working principles

to accelerate and reduce the cost

of the transition to a distributed

energy system.

Deliver outcomes that seek to balance

community expectations for an

affordable, reliable and cleaner energy

system through clearly prioritised

workstream initiatives.

DEIP Principles

DEIP is not an organisation and it does not

have dedicated resources. Rather, it is a forum

where organisations come together to share

insights and develop priorities.

Coordination of work programs happens

through the DEIP Steering Group comprising:

º Australian Energy Council (AEC)

º Australian Energy Market Commission

(AEMC)

º Australian Energy Market Operator (AEMO)

º Australian Energy Regulator (AER)

º Australian Renewable Energy Agency

(ARENA)

PURPOSE

“To collaborate to maximise the value of customers’ Distributed Energy

Resources to the Australian energy system for the benefit of all energy users.”

PRINCIPLES

DEIP has the following guiding principles:

Collective leadership – DEIP will develop

and project a shared vision for change.

Collaborative approaches – DEIP will

promote genuine and open collaboration

targeted at information sharing across

industry and with energy customers.

Outcomes focused – DEIP will move

quickly, and deliver real outcomes that

create value for customers and industry.

Agile and fit-for-purpose – DEIP

will build on existing work, approach

challenges flexibly, and select the best

suited techniques for each task.

Collaboration

Stakeholders

(customers, governments, industry, international expertise)

Steering Group

(agrees priorities and processes for engagement )

Secretariat

(coordination & knowledge sharing)

Two-way knowledge sharing

º Clean Energy Council (CEC)

º Clean Energy Finance Corporation (CEFC)

º Clean Energy Regulator (CER)

º Commonwealth Scientific and Industrial

Research Organisation (CSIRO)

º Energy Consumers Australia (ECA)

º Energy Security Board (ESB)

º Senior Committee of Officials (SCO)

The Steering Group is supported by a

secretariat that helps coordinate collaboration

and knowledge sharing activities.

The intent is that the DEIP Steering Group

would hold regular DEIP Dive Forums with

interested stakeholders.

Distributed Energy Integration Program Distributed Energy Integration Program8 9

DEIP Framework

LEADERSHIP

Collaborate to maximise the value of customers’ Distributed Energy Resources

to the Australian energy system for the benefit of all energy users

EXCHANGING VALUE IN MARKETS

Energy markets that efficiently

exchange the fair value from customer

owned distributed energy

MARKETS

Enabling multi-party

exchange of value

in markets within

physical network

constraints

COLLABORATION

FRAMEWORKS

Optimising investment

in and operation of

network and DER

infrastructure

KNOWLEDGE SHARING

INTEROPERABILITY

Standardising the

physical operation,

visibility and resilience

of the distributed

energy systems

DEMONSTRATIONS

CUSTOMER

Capturing and

sharing customers’

preferences to inform

the future

RESEARCH & INVESTIGATION

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ork

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ams

Act

ivit

ies

DISTRIBUTED ENERGY AND THE GRID

Technical systems that enable the

efficient use and operation of

the distributed energy system

Customer

INITIATIVES

Customer Insights - DEIP will work with

Energy Consumers Australia and other

customer advocacy groups to:

º establish a national DER Customer

Panel as a consultative resource

for DEIP initiatives

º consolidate knowledge around

customer segmentation and inform

stakeholders

º support and share resources that

improve insights across customer

facing funded projects.

Data & Information - DEIP will continue

to support the Commonwealth and

regulators to implement the Consumer

Data Right in the energy sector by:

º sharing project experiences

and insights

º reviewing opportunities to support

projects or studies to inform

implementation

º reviewing opportunities to support

novel ways to use consumer data

º supporting the development of

unbiased information to inform

customers.

Distributed Energy Equity - DEIP will

work with the energy sector to assess

and remove barriers for all customers

to access the benefits of DER.

OVERVIEW

This workstream seeks to enable the voice

of customers to evolve best practices, inform

protections and educate industry

and customers to make informed choices.

CHALLENGE

While customer investment in distributed

energy is transforming the power system,

the current patterns of investment (and

associated business models) are not

technically or economically sustainable.

Reforms will be required which will impact

customer decisions, product standards and

the income customers can receive from their

distributed energy assets.

To ensure this transition creates valuable

outcomes, DEIP has identified a need to:

º understand how customer preferences

might interact with potential future

reforms and explore the social licence for

alternative reform options

º understand how to leverage customer

interest in distributed energy, through

new products and services, while complying

with the required protections

º develop information and tools for customers

that helps them make informed decisions.

Distributed Energy Integration Program Distributed Energy Integration Program10 11

Markets

INITIATIVES

VPP Enablement – DEIP will seek to

enable the participation of Virtual

Power Plants (VPPs) in energy, ancillary

services and network support markets.

Focus will be on tools and techniques

that improve the functional maturity

of existing frameworks for integrating

distributed energy. This may include

upgrades to AEMO’s systems and third

party platforms to enable greater VPP

participation in markets

Demand Response Integration – DEIP

will inform the Demand Response Rule

changes currently being considered by

the AEMC. Focus will be on investigating

innovative approaches to determining

electricity baselines, scheduling

wholesale demand response and network

constraints management.

Distribution-Level Optimisation – DEIP

will continue to monitor and support

the AEMO-ENA Open Energy Networks

process. Focus will be on supporting

projects or studies that consider market-

based mechanisms or other solutions

that optimise DER participation in

markets within distribution level network

constraints.

OVERVIEW

This workstream will help to improve

market frameworks that can be barriers to

transitioning the market to extract better

value from DER use.

CHALLENGE

Adapting market frameworks is required to

efficiently value and facilitate DER service

transactions, including demand response,

in real time.

AEMO and the AEMC are leading several

market-based trials including VPP trials

and demand response integration.

These trials are important as delays in

maturing market frameworks increase

the risks of over and under investment in

DER, potentially increasing the cost of the

transition to a high-penetration distributed

and renewable grid.

Addressing commercial barriers to the

participation of demand response in the

market facilitates its ability to enable high

penetrations of renewables.

Frameworks

INITIATIVES

Value Assessment – DEIP will consider

the customer and whole-of-system value

of the services that can be provided

by DER. These services can be used in

future business cases for expenditure

or investment by networks, customers

or aggregators either in increased DER,

or by networks increasing their hosting

capacity for DER. Part of this work

includes clearly defining the various

services DER can provide to network

operators.

Evaluation Techniques – DEIP will

support the development of case studies

and methodologies to inform decisions

by network businesses and the AER on

efficient expenditure for monitoring

DER hosting capacity and investing in

capacity improvements.

This would draw on specific modelling

of how valuation methodologies could

be applied in different network contexts.

Network Hosting Capacity Baselining

– DEIP will consider how to determine

hosting capacity baselines from which

the benefits of new investment can be

measured and where DER can be better

utilised without additional investment.

Baselines could be trialled on specific

network areas and tested against actual

DER penetration rates.

OVERVIEW

This workstream will consider the ways

to utilise existing regulatory frameworks,

or potential reforms to the frameworks,

to promote investment in the operation

of DER and supporting infrastructure.

CHALLENGE

The falling cost of DER are increasing the

options available to manage electricity

networks for network and system operators.

However, current regulatory frameworks

covering network expenditure and pricing

may not incentivise the use of DER to its

fullest potential. Networks may also lack

confidence in non-traditional DER based

approaches, which are relatively immature

by industry standards.

Innovative and complementary mechanisms

as well as outcomes from ARENA funded trials

could help DER-based integrated solutions

become mainstream.

The information gap around the current

extent of hosting capacity and methods

to measure it creates uncertainty around

new enabling investments.

Distributed Energy Integration Program Distributed Energy Integration Program12 13

Interoperability

OVERVIEW

This stream will focus on efficient and

effective systems, standards and protocols

to ensure an appropriate balance between

operability, flexibility and security of

both the electricity grid and distributed

energy systems.

CHALLENGE

Full participation of DER in the future power

system will require limitations so that they

are operated up to, and within, local

network constraints.

This will require new methods for assessing

and communicating between networks,

market operators and DER service providers

using standardised, secure and reliable

monitoring and communication protocols.

This, in turn, may need to be reflected in the

technology such as meters, inverters, load

control devices and distribution network

management systems.

There is a significant risk that delays in

establishing interoperability and cyber

security standards could result in current

DER assets becoming stranded or

under-utilised in the future.

How to get involved

Interested stakeholders can get involved by:

º Registering your interest to participate

in future knowledge sharing and DEIP

workshops

º Contacting the DEIP secretariat by

filling in the online form at

www.arena.gov.au/deip

º Approaching ARENA directly with

funding applications at

www.arena.gov.au/funding/programs

INITIATIVES

Grid Connections – DEIP will support the

development of innovative techniques

to improve the grid connection process

for DER. This will include supporting

Energy Networks Australia to develop

suitably standardised DER connection

policies across all Australian networks

which consider the interoperability of

DER and streamlining the grid connection

and market registration experience for

customers, installers and VPP aggregators.

Enhanced Visibility, Forecasting & Control

– DEIP will focus on improving

the operational visibility and control

of DER. This will include:

º improving ability to forecast the

operational characteristics of active

and passive DER

º providing greater visibility to customers

and installers of the network’s local

hosting capacity

and constraints

º standardising communication protocols

between DER and AEMO

and network operators to improve local

constraints balancing techniques used

to manage and mediate competing

demands for network use.

Cyber Security – Supporting the

development of best practice frameworks

and approaches for managing the resilience

of a high-DER grid to cyber-attack or

physical disruption of communications

infrastructure.