OPEN ENERGY NETWORKS
A Joint AEMO and Energy Networks Australia Initiative
Consultation on how best to transition to a two-way grid that allows better integration of Distributed Energy Resources for the benefit of all customers
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Conte
ntsExecutive Summary 3
Glossary of Terms 8
1. Introduction 9
1.1 Context-Achangingworld 9
1.2 AustraliainanInternationalContext 9
1.3 TechnicalchallengesintegratingDER 9
1.4 Theimportanceofeffectivecoordination 11
1.5 Purposeofthedocument 11
2. Path-ways for DER to provide value 13
3. Maximising passive DER potential 14
3.1 Localnetworkchallenges 14
3.2 Securityofsupplychallenges 15
3.3 ManagingpassiveDERtoreleasevalue 17
3.4 CapabilitiestodynamicallymanageDER 18
3.5 FlexibleLoad 19
4. Maximising active DER potential 20
4.1 Localnetworkchallenges 20
4.2 Securityofsupplychallenges 21
4.3 NewandemergingDERservices 22
4.4 EvolvingmarketsfornewDERservices 22
4.5 EnsuringactiveDERcanreachthemarket 23
5. Frameworks for DER optimisation within 25 distribution network limits
5.1 Thepresentframework 25
5.2 Functionsrequiredinfutureframeworks 27
5.3 Principlesforframeworkdesign 29
5.4 Responsibilityfordistributionleveloptimisation 29 anddispatch
6. Immediate actions to improve DER coordination 34
7. Next Steps 26
7.1 Collaboration 36
7.2 Whatweneedfromyou 36
Citation
AEMOandEnergyNetworksAustralia2018,OpenEnergyNetworks,consultationPaper.
Copyright
©EnergyNetworksAustralia2018.Totheextentpermittedbylaw,allrightsarereservedandnopartofthispublicationcoveredbycopyrightmaybereproducedorcopiedinanyformorbyanymeansexceptwiththewrittenpermissionofEnergyNetworksAustralia.
Important disclaimer
AEMOandEnergyNetworksAustraliaadvisethattheinformationcontainedinthispublicationcomprisesgeneralstatements.Thereaderisadvisedandneedstobeawarethatsuchinformationmaybeincompleteorunabletobeusedinanyspecificsituation.Norelianceoractionsmustthereforebemadeonthatinformationwithoutseekingpriorexpertprofessional,scientificandtechnicaladvice.Totheextentpermittedbylaw,AEMOandEnergyNetworksAustralia(includingtheirrespectiveemployeesandconsultants)excludeallliabilitytoanypersonforanyconsequences,includingbutnotlimitedtoalllosses,damages,costs,expensesandanyothercompensation,arisingdirectlyorindirectlyfromusingthispublication(inpartorinwhole)andanyinformationormaterialcontainedinit.
Acknowledgements
MarkVincent,SAPowerNetworksJohnPhillpotts,EnergyQueenslandChrisCormack,AustralianEnergyMarketOperator(AEMO)JennyRiesz,AustralianEnergyMarketOperator(AEMO)VioletteMouchaileh,AustralianEnergyMarketOperator(AEMO)DrStuartJohnston,EnergyNetworksAustralia
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Executive SummaryAustralian consumers have, over the past 10 years, heavily invested in rooftop PV and the Australian Energy Market Operator (AEMO) forecasts this trend will continue for the foreseeable future. In addition, storage solutions (mostly household batteries) have entered the market and customers are predicted to also adopt these enthusiastically.
Uptakeofthesetechnologiesisleadingtoanincreasinglydecentralisedenergysystem,whereasignificantamountofelectricityisgeneratedatasmallerscale.Somelocalareasalreadyexperienceahighlevelofdecentralisation,wherethetraditionalone-waypowerflowsfromtransmissionthroughdistributiontocustomershavebecometwo-wayflows.
Anumberofopportunitiesandchallengesarisewithincreaseddecentralisation.TheemergenceofDistributedEnergyResources(DER)asaresourcetoindividualcustomersprovidesthosecustomerswithanopportunitytoreducetheirpowerbills.If,however,DERintegratesintothepowersystemasaresource,itspresenceprovidesfurtheropportunitiestodelayoreliminatetheneedforcertainnetworkinvestmentsandfunctionascompetitiontotraditionallarge-scalegenerationforbothenergyandsystemsupportservices.DERcanalsoenablegreaterlevelsofrenewableintegrationandsupplyadditionalresiliencytothenetworks.
DERcanbebothapassiveoractiveparticipantonthenetwork.RooftopPVisanexampleofpassiveDER.Whileitsproductioncansometimesbeforecastwithahighdegreeofconfidence,thelackofcontroloversolaroutputmeansthatthesystemandthelocalnetworkneedtobeadaptedtocaterforsolarpenetration.
ActiveDERincludesstoragesolutionssuchashouseholdbatteries.Batteriesarecontrollablebuttheirbehaviourishardertoanticipateunlesstheyinteractwiththesystem.OtherexamplesofactiveDERincludemoresophisticatedhomeenergymanagementsystemsthatcanadjustelectricityusageinresponsetopricesignalsordispatchsignals.
BothactiveandpassiveDERcreatechallengesfortheelectricitysystem.Atalocallevel,distributionbusinessesareresponsibleformanagingvoltagelevelswithinaregulatedstandard,andtraditionalapproachestomanagingthiscanbeineffective.LocalnetworksalsohavephysicallimitsontheamountofDERtheycanhost.Whentheselimitsarereached,fusesmaybloworequipmentmayoverheat.ThesechallengesonlyincreasewiththearrivalofactiveDER.
Atawhole-of-systemandmarketlevel,AEMO,themarketoperator,isresponsibleforeconomicallyoptimisingdemandandsupplyandensuringthesecureandreliableoperationofthepowersystem.Todothis,itrequiresvisibilityofcurrentandforecastdemandandsupply,aswellaspowerflowsacrossthesystem.Whileinthepastitwasrelativelyeasytopredicthouseholddemand,theconnectionofmillionsofnewDERoverwhichithasnovisibilitymakesthisexponentiallyharder.
Ifnoactionistakentoaddresstheseissues,customerswillsuffer.Thequalityoftheirelectricitymaydegrade,affectingthelifespanoftheirappliances(e.g.toohighvoltage).Theirexistinginvestmentinsolarorbatteriesmaytakelongertopaybackiftheyareconstrainedregardingtheamountofelectricitytheycantakefrom,orfeedbackintothegrid.CustomersmaynotgetpermissiontoconnectanewrooftopPVsystemiftheirstreetisalreadysaturated.Or,ifthedistributormakescostlyinvestmentstoenablemoreDERtoconnect,thenetworkchargesontheirbillmayrise.
Coordinationofthesedistributedresourcesisessentialtoalleviatethesechallengesandconvertwhatcouldotherwisebeachallengetothesystemintoanasset.Therearealsosignificantfinancialbenefitstobegainedfromoptimisingthebehaviouroftheseresources.EnergyNetworksAustralia’sElectricityNetworkTransformationRoadmap2017,developedwiththeCSIRO,estimatedthispotentialbenefittobe$1.4billioninavoidednetworkinvestmentandaloweringofhouseholdelectricitybillsby$414ayear.
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TraditionalstrategiesincludelimitingexportsfromDERtothegrid,upgradingthenetworkandreformingtariffs.Whileimportant,theseapproachesaffectalargeareaoveralongperiod,whereasthesespecificchallengesarelocalisedandforverydefinedperiodsoftheyear.Thesechallengesrequiremoreactiveresponses.
Moremodernapproachesconsiderdynamicstrategies,whichincludebothusingandlimitingexportsincertainlocationsatcertaintimestoreducetheimpactoftheinterventionforcustomersinanaffectedareaandincreaseduseofsharedstorageatthecircuitleveltoincreasethehostingcapabilityofthenetwork.OthertechnologieslookatvoltagemanagementbothacrossthesystemandinindividualhomestohelpfurthersupportintegrationofDERandfacilitateatwo-waysystem.NewinvestmentforthosecustomerswhohaveexistingDERmayberequiredastheirtechnologyneedstobemade‘smart’soitcanreceivesignalsandincentivestostop(orstart)exporting.Additionally,morevisibilityofthenetworkconditionatthelocal,lowvoltagelevelisneededsothesesignalscanbecreated.
AcoordinatedapproachthatfacilitatesintegrationofDER,consideringbothtransmissionanddistributionconstraints,willdeliverthebestoutcomesforcustomers.Ratherthanimposinglimitsoncustomers,optimisationcanhelpprovidefinancialincentivestocoordinateallelementsofthesystemtoworktogetheroptimally–anddeliveredatleastcosttoallconsumers.Sinceonehousehold-sizedDERset-upcannotsignificantlyimpactthesystem,largeraggregatorswillsignupmanycustomersanddelivertheircombinedpowertothesystem.CombiningmanyDER,suchasinavirtualpowerplant(VPP),canprovideserviceslikepeakinggeneration,whichincreasescompetitionandlowerscostsforallcustomers.
Increasinglevelsofvariablerenewableenergyinthewholeenergysystemrequiresflexibilityandefficiency.DERcanprovidedemandshifting,loadandresourcebalancingandbecomeanintegralpartofareliable,lowercost,securesystem.IncorporatedintoAEMOscurrentoptimisationprocess,VPPswillreducetheneedforpeakingplantandenhancesystemlevelresiliency.Itisimperative,howeverdistributionnetworksarelinkedintotheseprocessestoensuretheinclusionofDERinthesystemconsiderslocalnetworklimits.
Distributionnetworkbusinessesareresponsibleforoperatingandmaintainingtheirnetworkswithintechnicalandsafetyrequirements.AEMOisresponsibleforgridreliability,systemsecurityandoperatingthemarket.Inthispaper,EnergyNetworksAustraliaandAEMOareexploringhowbesttofacilitatetheentryofDERintothemarket.Ourobjectiveistoidentifyboththesystemrequirementsthatmustbeaddressedintheformationofatwo-waysystem,andtoobtainabetterunderstandingfromtraditionalandnewmarketparticipantshowfromanetworkandmarketoperatorperspective,wecanreducebarrierstoentryintothesystemandbestfacilitateinnovationandcompetitionatthegridedge.
Informingtheseconsiderationsarethefollowingkeyprinciples:
1. Simplicity,transparencyandadaptabilityofthesystemtonewtechnologies
2. Supportingaffordabilitywhilstmaintainingsecurityandreliabilityoftheenergysystem
3. Ensuringtheoptimalcustomeroutcomesandvalueacrossshort,mediumandlong-termhorizons–bothforthosewithandwithouttheirownDER
4. Minimisingduplicationoffunctionalitywherepossibleandutilisingexistinggovernancestructureswithoutlimitinginnovation
5. PromotingcompetitionintheprovisionandaggregationofDER,technologyneutralityandreducingbarrierstoentryacrosstheNationalEnergyMarket(NEM)andWesternEnergyMarket(WEM)
6. Promotinginformationtransparencyandpricesignalsthatencourageefficientinvestmentandoperationaldecisions
7. Lowestcost.
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AEMOandEnergyNetworksAustraliawillexploreDERdispatchwiththewiderindustrysector.Matterstobeexploredincludewhetheraggregatorshavedirectaccesstothewholesalemarketalongsideexistinggenerationresources,orwhetheralevelofsub-optimisationatthelocaldistributionlevelshouldbeundertakenpriortodispatchatawholeofsystemandmarketlevel.Thiswouldprovidebenefits,suchas:
» Integrationofthetwo-waysystemandreducingbarrierstoentrymaybeachievedwithacentralplatformprovidedbyAEMOthatinterfaceswithaggregators,withnetworkbusinesseslinkedtotheplatform
» IncreasingtheproductivityofexistingnetworkinvestmentthroughtheuseofDERasatooltoreduceoperationalcostsandsupportgreatersystemefficiency
» IncreasingtheresiliencyofthesystemthroughthestrategicdevelopmentofDER.
AEMOandEnergyNetworksAustraliarecognisethatbusinessmodelsareevolvingalongwiththetechnologytoprovidevaluetocustomers.Throughthisworkprogram,wewanttoexplorehowbestwecanintegrateDERintothesectorandrecognisethatindoingsowemustbebroadlyenablingofmultiplebusinessmodelsandapproaches.Inparticular,DERwillbebothpassiveandactiveonthegrid.
Customersandprosumerswillwanttoparticipatedirectlywiththewholesalemarketthroughaggregators,retailers,virtualpowergenerationplatformsandinsub-marketsthatincludepeer-topeertradingthatutiliseblockchaintechnologies.EnergyNetworksAustraliaandAEMOviewtheseasopportunitiesforcustomerstoachievegreatestvalueastheyseebest.Theresponsibilityofthenetworkownersandsystemoperatorsistoprovidetheplatformdesignsthatenableaccesstothenetworksandtothemarketbycustomersandtheirrepresentativesinamannerthatisaccommodatingofmanydifferentbusinessmodelswithanoverallobjectiveofachievingthepositivesystemoutcomesoutlinedabove.
Thereareseveralwaystheplatformcanbedesignedanddelivered,andEnergyNetworksAustraliaandAEMOareseekinginsightsfromthemarketonwhatdesignwouldbepreferredbyparticipants.Threeoptionsaredescribedbelowwithaninitialassessmentofrelativeadvantagesanddisadvantages.Thesearedescribedmorefullyinthepaper.
Single Integrated Platform (SIP) -ThesingleplatformmodelenvisagesaunitarypointofentrytotheentiretyoftheNEMandWEM.Underthisoption,theplatformwouldbeanextensionofthewholesalemarket.AEMOwouldprovidetheplatformaspartofitsmarketandsystemresponsibilitiesandalongwiththeindividualdistributionutilitieswilldevelopasingleintegratedplatformthatwilluseasetofagreedstandardinterfacestosupporttheparticipationintheintegratedmulti-directionalmarketbyretailers,aggregators,andVPPplatformcompanies.TheSIPwillthensimultaneouslysolvelocalsecurityconstraintsandsupportwholesalemarketentry.Underthisconfiguration,accesstotheplatformwillbeaone-stopshopthatprovidesmarketparticipantstheopportunitytoparticipateanywhereintheNEMorWEMwithouthavingtodevelopseparatesystemsortoolstointegratewiththevariousindividualdistributionplatforms.Networkbusinesseswillbelinkedintotheplatform,withdistributionbusinessprovidinginformationonlocalconstraintstoAEMO.AEMOwouldconsiderthisinformationandeconomicallydispatchtheseresourcesalongsideotherresources(transmissionconnectedload,largescalegenerationetc.).
TheSIPdesignextendsthewholesalemarketusedtoday.Italsohastheadvantageofothertwo-wayplatformsbecauseitcanpushinformationtoparticipantssuchastransparentsystemrequirements,andcanintegrateotherrelevantservices.
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Two Step Tiered Regulated Platforms -Asecondalternativeisamodelwherethereisalayereddistributionlevelplatforminterfaceoperatedbythelocaldistributionnetworkandaninterfacebetweenthedistributionnetwork‘splatformandAEMO.Underthisdesign,individualdistributionnetworkscandesigninterfacesthatbestmeettheirsystemrequirements.Participantswouldthenneedtocommunicatedirectlywiththedistributionlevelplatformforthelocalconstraintissuesandthedistributionnetworkwouldoptimisetheseresourcesagainstlocalnetworkconstraintsbasedonbidsfromtheaggregatorsservicingthearea.
Distributionnetworkswouldprovideanaggregatedviewperthetransmissionconnectionpoint.AEMOwouldtakethisinformationandconsidertheoverallsystemsecurityandeconomicdispatch.
Thistieredmodelhassomeadvantageintermsofallowingpotentiallygreaterlevelofautonomyforindividualdistributionutilitiesandthereforegreaterlevelsofbespokeapproaches.Networkbusinessesarebestplacedtomanagetheirdistributionnetworkconstraints.However,thismodellosesthescaleofaunifieddesignandmayaddriskandcomplexitytomarketapproaches.Thetieredmodelwouldrepresentmoreofaone-wayinformationflowplatform,sinceasatieredapproachtheinformationwouldflowonewayfromthedistributionoperatortoAEMOandthenfromAEMOtothemarket.
Independent DSO -Athirdoption,thatisavariantofthesecond,isforanindependentparty–aDSOthatisseparatefromAEMOandthedistributionutility.UnderthismodeltheindependentDSOwouldworkwiththedistributionutilitytooptimisethedispatchoftheDERbaseduponlocalsystemconstraintsthatareprovidedbythenetworkbusiness,providetheaggregatedbidstoAEMOforincorporationintothelargerdispatch.Thisoptionwillbemorecomplexthantheothersandmaybesignificantlymorecostly.
Variousjurisdictionsareexaminingtheseoptions.IntheUnitedStates(US),thepreferencethathasbeenidentifiedinNewYorkandotherjurisdictionsisforseparateDSO’sforeachutility.OneaspectofthismodelundertheUSjurisdictionalconstructisthattheDSOremainsunderthejurisdictionofindividualstates,whiletheIndependentSystemOperatorequivalentofAEMOisunderthejurisdictionofthefederalgovernment.IntheUnitedKingdom(UK)oneofthefiveoptionsbeingexploredisconsideringallocatingmanagementofDERdispatchtoanotherparty;anindependentdistributionsystemoperator.AEMOandEnergyNetworksAustraliaareconsideringthismodel,butgiventheneedtoestablishanumberofneworganisations,thechallengesofmanagingsafetyandreliabilityrisksandassociatedcost,duplicationandcomplexityofinformationflows,thisapproachisnotfavoured.
Whiletheaboveoptionsarethoroughlyconsidered,thereareactionsweshouldtakenow.Theseinclude:
» ReviewingregistrationframeworkstoallowlargeDERproviderstoparticipateinthecentraldispatchprocess
» DevelopingbettercriteriafortheparticipationofVPPsincentraldispatch
» ExaminingexpandedinformationsharingbetweendistributionnetworkbusinessesandAEMO
» Continuedworkwithlocalplatformsolutionstodeterminehowbesttointegratedaggregatedresourcesintothesystem
» ImprovedinformationsharingonthecurrentbilateralagreementsforDERservices
» Buildingabetterunderstandingofnetworkconstraintsforindividualdistributionnetworkbusiness
» DevelopingstandardsforDERmonitoringandmanagement
» Continueddevelopmentofmarketdesigntosupportdemandbasedresourceparticipationintothemarket.
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Weinvitestakeholders,includingpartners,customers,innovators,businesses,policymakersandthewiderindustry,torespondtotheseproposedactionsandengagewithusinthecomingmonthstofurtherinformandguidethecreationofaframeworkfortheeffectiveintegrationofDER.Inpartnershipwithstakeholders,theoutcomeoftheprocessistodevelopawhitepaperthatwillinformregulatoryprocesses.
Commentsonthisconsultationpaperarewelcomeby3August2018.Itshouldalsobenoted,thatduriingboththeconsultationperiodforthispaperandstage2ofthisworkprogram,aseriesofstakeholderworkshopswillworkthroughvariousissuestoinformthedevelopmentofaWhitePaper.AEMOandEnergyNetworksAustraliawillcommunicatethetimingandlocationoftheseworkshopsinduecourse.
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Glossary of Terms
Aggregator-ApartywhichfacilitatesthegroupingofDERtoactasasingleentitywhenengaginginpowersystemmarkets(bothwholesaleandretail)orsellingservicestothesystemoperator(s).
DER-DistributedEnergyResources;canrefertodistributionlevelresources,whichproduceelectricityoractivelymanageconsumerdemande.g.PVsolarsystems,batteries,andDemandResponselikehotwatersystems,poolpumps,smartappliancesandairconditioningcontrol.
PassiveDER -Referstoresourcessuchassolar,batteries,hotwaterservicesandotherelectricalequipmentthatoperateunderlocalalgorithmsandarenotbeingremotelycontrolledbyathirdparty(suchasanaggregator).
ActiveDER-Incorporatesexternalcontrolinputsordatafeedsthatarebeingusedtoactively‘orchestrate’theirbehaviourinresponsetohighpricesorotherconditions
DSO -DistributionSystemOperator;thistermhasbeenusedtorefertothefunctionsofDistributionLevelcoordinationandoptimisationofmultipleDERaggregatorsinmultiplemarketsoperatingatdistributionlevel.
Optimisation -referredtohereastheaggregationandprioritizationofdistributionlevelbidsandoffers;inotherglobalmarketsalsoknownas“orchestration”.
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1. Introduction1.1 Context - A changing world
IntheyearssinceAustralia’sNationalElectricityMarket(NEM)andWesternElectricityMarket(WEM)weredesigned,thesystemhasgonefromonethatwasdominatedbycentrallarge-scale,synchronouspowerplants,andpassiveconsumption,toonethatincludesamultitudeofresourcesandtechnologiesofvarioussizes.Atthesametime,customersareengagingwiththeirelectricityservicesinnewways,andwiththis,weareseeingasignificantproportionofenergybeinggeneratedatthecustomerpremises–facilitatingamovefromacentralisedtoadecentralisedsystem.
Thistrendisexpectedtocontinue–domesticallyandinternationally.
ThesechangesareexpectedtopresentoperationalchallengesforAEMOandnetworkbusinesses.Withtherightresponseandmodificationtomarketandtechnicalmechanisms,thiswillenablestorage,generationandflexibledemandtomaintainreliabilityofthenetworksandthesystemforalowercosttoallcustomers.Figures1and2illustrateAEMO’sforecastsfortheinstalledcapacityofdistributedrooftopphotovoltaics(PV)anddistributedbatterystorageintheNEMandWEM,showingaforecastforongoingsteadygrowth.
Flexibilityandrapidresponsewillbeanimportantoperationalcharacteristicasthepowersystemtransforms,anddistributedenergyresources(DERs)suchasstorageanddemandsideresponsecanprovidecompetitivesourcesofenergyandsystemservices.UnlockingthepotentialofDERcansmooththeprofileofgriddemandandincreasetheutilisationnetworkresources,resultinginamoreproductiveandefficientpowersystemforconsumers–atbothlocalandwholeofsystemlevels.
1.2 Australia in an International Context
Australiaisleadingtheworldinthedecentralisedtransition,asdemonstratedinfigure3below.Ithighlightsthatgivencurrentpolicysettings,AustraliawillexceedtherateofdecentralisedgenerationincountriessuchasGermanyinthenextfewyears.AustraliawillbeattheforefrontofmakingtherequiredchangestothemarketandsystemstoallowgreaterDERintegration,andwewillneedtodosoaheadofothercountriesandjurisdictions.
1.3 Technical challenges integrating DER
Australia’selectricitysystemwasoriginallydesignedtodeliverlarge-scalecentralisedgenerationtocustomers,ratherthantointegratemillionsofcustomersownedgenerators.Traditionalone-waypowerflows–fromthetransmissionsystem,throughthedistributionnetworkstoendcustomers–arenowincreasinglytwo-way.Theriseindistributedgenerationisleadingtoperiodsduringwhichpowerisbeingexportedfromdistributionnetworksontothetransmissionsystem.
Thisgrowthincustomertake-upofDERhasalreadyresultedinsignificantimpactstopowerqualityinanumberofjurisdictions,challengingexistingapproachesusedbynetworkbusinessestomanagevoltagelevelswithinregulatedstandards,andincreasinglyposesriskstonetworkreliabilityandsecurity,particularlywithincreasingdeploymentofvirtualpowerplants(VPP).
SomeofthesystemandmarketoperationchallengesincludethelackofDERvisibility,causingAEMOdifficultyinoperationalforecasting,balancingthesystemandmaintainingsystemstrength.Inaddition,theresponseofDERtodisturbancesmayalsohavesignificantimpactsonsystemstabilityandthehighlevelsofDERhinderthesuccessfuloperationofEmergencyFrequencyControlmechanisms.TheincreasingshareofdemandbeingmetbySolarPVwillmakeitmorelikelythatAEMOwillneedtoadjustnormalmarketoperations.
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Strong - PV
Strong - Storage
Neutral - PV
Neutral- Storage
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Estimated Actual Rooftop PV
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Figure 1: ProjectedinstalledcapacityofrooftopPVanddistributedbatterystorageintheNEM
Figure 2: ProjectedinstalledcapacityofrooftopPVanddistributedbatterystorageintheWEM
Strong - Rooftop PVStrong - Storage
Neutral- Rooftop PVNeutral- Storage
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1.4 The importance of effective coordination
Ifthesedistributedresourcesarenotmanagedwell,itwillresultinincreasednetworkandsystemoperationcoststhatwillbebornebyallelectricitysystemcustomers.
BasedonthemodellingundertakenbyCSIROfortheEnergyNetworksAustralia-CSIRONetworkTransformationRoadmap2017,ifthemilestonesandactionsoutlinedintheRoadmaparefollowedintheestablishmentofoptimisationandcoordinationofDERatthedistributionlevel,itcouldprovideacumulativevalueof$158billionby2027andbeworthmorethan50%ofNEMvaluein2050.Thiswouldbedeliveredthroughbroadefficienciestothesystem,improvedsystemutilisationandcustomersbeingabletoexchangevaluewiththegrid.Thisvaluewillbeprovided,throughoutcomes,suchasreducedrequirementstobuildadditionalgenerationcapacityandnetworksolutionstodealwithchangesindemand,andprovidingcustomerswithbettervaluefortheDERinvestmentsthroughaccesstonewmarkets.Forexample,accessofdemandmanagementservices.
Figure 3: globalrateofelectricitymarketdecentralisation
AustraliaGermanyItalyJapanBrazilThailandMexicoUnited StatesIndiaChina0%
5%10%15%
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20%25%30%35%40%45%
2012 2016 2020 2025 2030 2035 2040
Dec
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DERthereforeprovidesbothopportunitiesandchallengestotheenergysector.Ifmanagedpoorlyitcouldincreasecost,ifmanagedwellitcoulddrivesignificantsavings.EstablishingeffectiveframeworkstooptimisethevalueofDERisthereforeacriticalcontemporarychallengefortheenergysectorinAustralia.
1.5 Purpose of the document
ThepurposeofthispaperistolaythefoundationsfortheestablishmentofanagreedframeworktofacilitateincreasedlevelsofDER,anditsintegrationandoptimisationwiththesystem.Toassistinidentifyingthepreferredpathway,thisdocumentisintendedtosetoutsomeinitial“strawman”frameworkstofacilitatemoreconcretediscussionswithstakeholders.
Feedbackonthispaperiswelcomefromallmarketparticipantsandstakeholders,andwillbeutilisedtodevelopthesubsequentWhitePaper.TheWhitePaperwillaimtoidentifyapreferredhigh-levelframeworkforaDistributionSystemOperator(DSO)orDistributionLevelOptimisation.
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WhilebeingundertakenbyAEMOandEnergyNetworksAustralia,thisprojectiscommittedtoensuringallstakeholderscanengageintheprocesstoidentifythepreferredfinalframework.
Thekeyquestionwewouldlikeallstakeholderstoconsiderastheygothroughthisdocumentis:
“What new capabilities, functions and roles will be required to coordinate and optimise the value of customers’ DER investments whilst maintaining security and reliability across the NEM and WEM?”
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2. Path-ways for DER to provide valueThereisabroadrangeofDERtechnologysophisticationrangingfromsimplepassiveDERsuchasresidentialsolarPVtocomplex‘active’systemssuchasresidentialbatterieswithsmartcontrollersthatarecapableofrespondinginacomplexmannertopricespikes.
ThesedifferenttypesofDERrelease,orhavethepotentialtorelease,valuetocustomersindifferentways.
AlmostallDERcurrentlyinstalledispassiveDER.PassiveDERbehaviourislikelytobediversifiedintimeandlocation,andmorelikelytoberelativelypredictableprovidedthattheweather(includingcloudcoverandtemperature)andotherlocaldriverssuchasretailtariffs,isknown,foragiventimeofdayandseason.
CustomersderivetwoprimarysourcesofvaluefrompassiveDER:
» Self-consumption (bill reduction)–byoptimisinglocalgeneration,storageandconsumptionofenergytoreducetheirelectricitybills;
» Passive exports (feed-in tariffs)–bysellingsurplusenergytotheirretailertoearnadditionalrevenue.
ThesearethemostcommonsourcesofvaluecurrentlyobtainedbycustomerswithDER.
ActiveDERincorporatesbatteriesanddemandresponseinstallationsthatarecoordinatedbyanaggregatororretailer.Coordinatedbehaviourcannotbepredictedpurelybasedonweatherandtimeofdayorseason.
ActiveDERprovidesadditionalpotentialsourcesofvaluetocustomersvia:
» Participating in the NEM–withtheassistanceofanaggregator/retailer,customerscanuseactiveDERtoparticipateintheNEMforenergy,FrequencyControlAncillaryServices(FCAS)andanyotherservices.
» Bilateral agreements outside of the market–withtheassistanceofanaggregator/retailer,customerscanalsoestablishbilateralagreementstosellDERservicesoutsideofthemarket.Thiscouldincludenetworksupport(forexample,forvoltagecontrolortodeferaneedfornetworkaugmentation),servicestoAEMO(suchastheemergencyprocurementservicesorsystemsupport),orpeertopeertrading.EmergingblockchainordistributedledgerservicesmaybeusedtovaluetheseDERservices.Oftentheseserviceshaveveryhighvalue,butonlyneedtobeutilisedinfrequently,socouldpotentiallyutilisespareDERcapacity.TheythereforehavethepotentialtooffermateriallygreatervaluetoDERownersthanpurelypassiveoperation.CurrentlyveryfewcustomershaveDERthatisinteractive,althoughmanysystemshaveactivemanagementcapabilities.
ActiveDERthereforerepresentsasignificantuntappedpotential.
Consultation Questions:
1. Arethesesourcesofvaluecomprehensiveanddotheyrepresentasuitablesetofkeyuse-casestotestpotentialvaluereleasemechanisms?
2. Arestakeholderswillingtoshareworktheyhaveundertaken,andmaynotyetbeinthepublicdomain,whichwouldhelptoquantifyandprioritisethesevaluestreamsnowandintothefuture?
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3. Maximising passive DER potentialTheuptakeofpassiveDERacrosstheNEMhasbeendramatic.AsofFebruary2018,theCleanEnergyRegulatorreportsthatthereweremorethan1.8millionregisteredsmallscalesolarPVinstallationsinAustralia.Insomestates,notablySouthAustralia,nearlyonethirdofresidentialpremiseshaveroof-topsolarPV.
Customerpay-backperiodsarebasedonvaluereceivedinupfrontincentives,feed-in-tariffsandsubstitutionbasedonretailtariffs.Thesevaryfromstatetostatebuttypically,thesehavebeeninthe5to7yearrange.Customersthathavenotyetinstalledsystemshaveanopportunitytocapturegreatervalueaspaybackperiodsareprojectedtoreduceduetothatfactthatcostofinstallationcontinuestodecrease.Inaddition,industryconsultantsreportedthatoneineightSolarPVinstallationsin2017includedabattery.
Today’spowersystemwasdesignedforlargesynchronousgeneratorsandone-wayelectricityflow,notforhighpenetrationsofDERandbi-directionalpowerflows,andchallengesarebeginningtoariseinareaswithhigherpenetration.Thesehaveimpactsatboththelocalnetworkandwhole-of-systemlevels,whicharediscussedinthefollowingsections.
3.1 Local network challenges
PassiveDERhassignificantimplicationsonloadprofileswithinlocaldistributionnetworks.Thediagrambelowillustratesthetraditionaldemandprofileforagroupof100residentialcustomers,andtheimpactonthatdemandprofileoftheadditionofsolarPVtoeachofthosehouseholds.
Thesignificantlyincreasedrangeofpowerflowshasimpactson:
» Voltage management–reverseflowstendtoraisevoltagesinthenetwork.Thelargerdynamicrangeofpowerflowschallengesthecapabilitiesofexistingequipmentandpracticesusedtomanagevoltage.Theseissuescanoccurevenuptothetransmissionlevel.
» Local network capacity–undiversifiedexportsfromsolarsystemsmayexceedpeakdemandlevelsthatthelocalnetworkinfrastructurewasdesignedfor,potentiallybreachingcapacityconstraintsondistributiontransformersinparticular.
Figure 4: ImpactsofhighpenetrationPVoncustomerdemandprofiles
Traditional demand
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Yesterday’s challengeTraditional demand+ solar
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Networksonlyhavealimitedhostingcapacityuntiltheseimpactsresultinthedistributionbusinessneedingtoeither:
» Investinnetworkupgradestoincreasehostingcapacity;
» RestrictfurtherapplicationsforpassiveDERtobeinstalledatthoselocations;or
» ImplementmoresophisticatedmeanstomanageDERimpacts.
Theseissuestypicallyoccuronthelowvoltagepartofthenetworkthathasnothistoricallybeenactivelymonitoredormanagedbydistributionbusinesses.Thisbeingthecase,themajorityofdistributionbusinesseshavelimitedvisibilityandcapabilitytomanagethesenewtypesofchallenges.
3.2 Security of supply challenges
AsthepenetrationofrooftopPVincreases,challengesarealsoprojectedtoariseatsystem-widelevels.
TwostatesinAustraliahaveincreasingnumbersofrooftopPV.Figure5illustrateshowonminimumdemanddaysinWesternAustralia,rooftopPVisforecasttoprovidealldemandbyasearlyas2029.
Figure6illustrateshowonminimumdemanddaysinSouthAustralia,rooftopPVisforecasttoprovidealldemandbyasearlyas2025.However,challengeswillariseearlierthanthisdate,becauseitisnecessarytokeepsomesynchronouscapacityoperatinginSouthAustraliatoprovidesystemstrengthandinertia.Evenwiththeinstallationofsynchronouscondensers,somesynchronousgenerationwillneedtoremainoperatingforfrequencysettingpurposes.
Theseunitswillneedtooperateabovetheirminimumloadinglevels.Furthermore,itissometimesnecessarytolimitflowsoninterconnectorsexportingfromSouthAustralia,ifemergencyconditionsarise(suchassevereweather,bushfires,orforcednetworkoutages).
Residential and Business
Rooftop PV
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imum
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)
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Figure 5: AEMOminimumdemandforecastforWesternAustralia
16
Thefollowingchallengesareanticipated:
» From2021–22,itmaybenecessarytocurtailnon-scheduledgenerationinSouthAustraliainminimumdemandperiods,ifitbecomesnecessarytoreduceflowsoninterconnectorstozero.Thisrepresentsanactionoutsideofnormalmarketoperation,andhighlightsanemergingchallenge.
» From2024–25,itwillnolongerbepossibletoreduceflowsoninterconnectorstozeroifrequiredduringcertainperiods.Duringemergencyperiods(suchasbushfires,severeweather,orforcedoutagesofnetworkcomponents)AEMOmustbeabletoreduceinterconnectorflowstomaintainthepowersysteminasecurestate.
» From2027–28,itwillbecomedifficulttomaintainflowsontheHeywoodInterconnectorwithintherequiredlimitsduringperiodswhereSouthAustraliahasacredibleriskofseparation(plannedorunplanned).Plannedoutagescanbescheduledtoavoidminimumdemandperiods,butunplannedoutagesmayoccuratanytime.ThismeanstheSouthAustralianpowersystemwillnolongerbesecureifanunplannedoutageoccursatatimeofminimumoperationaldemand.
» From2036–37,itwillnolongerbepossibletomaintainflowsontheHeywoodInterconnectorwithinnominallimitsand±3Hz/sRoCoFlimits.Beyondthispoint,itwillbecomedifficulttooperateSouthAustraliawithinsecurelimitsevenundersystemnormalconditions,intheabsenceofintervention.
Asuiteofsolutionsareavailabletoaddressthesechallenges,andcanbeimplementedinparallel.Theseincludepromotingloadshifting(aimingtoincreasedemandinthelowestoperationaldemandperiods),promotingtheuseofcentralisedanddecentralisedstorage,expansionofinterconnectors,andnetworkinvestmentincludingsynchronouscondensers,voltagecontrolequipment,andresistorbanks.
ThetransitionofrooftopPVsystemsfrompassivetoactivecapabilitieswouldalsofacilitatecoordinatedfeed-inmanagement,whichcouldalsoaddressthesechallenges.Itisanticipatedthatfeed-inmanagementforrooftopPVsystemswouldbecalleduponveryrarely(lessthan1%ofthetimein2025,andlessthan4%ofthetimein2035),andwouldonlybenecessaryduring“emergency”conditionstomaintainpowersystemsecurity.
Figure 6: AEMOminimumdemandforecastforSouthAustralia
Residential and Business
Rooftop PV
Central assumption
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17
3.3 Managing passive DER to release value
Althoughsomeofthesechallengescouldpotentiallyberesolvedbyblanketlimitsongridexport,eitherlocallyorglobally,thiswouldsignificantlyreducethevaluetocustomersinvestinginsuchsystems–essentiallylimitingDERvaluetoself-consumptionalone.
BlanketrestrictionsarealsohighlyinefficientinthatpassiveDERtendstoonlycauseissuesforrelativelysmallperiodsoftimeinthenetworkorsystem.AEMOhasforecastthatevenby2035,issuesinSouthAustraliacausedbyexcessrooftopPVarelikelytooccurlessthan10%ofthetime.IssuesindistributionnetworkswilltypicallybelimitedtomildSpringweekdays,andonlyincertainpartsofthenetworkwhichtypicallyhaveolder,lowercapacitydistributioninfrastructureinplace.
Figure 7: AdditionalvaluereleaseenabledbydynamicDERmanagement
Equally,wide-scaleinvestmentinnetworksorgrid-sidesolutionswouldseemimprudenttodealwithissuesthatonlyoccurforshortperiodsoftimeincertainlocations.
Aspresentedinfigure7,anefficientstrategywouldbeonethattransitionsfromstaticmanagementofDER,applyingexportlimitsandundertakingnetworkupgrades,todynamicmanagementofDERwhereDERoutputismanagedonlyattimes,andinlocationswhereissuesarepredictedtoarise.DynamicmanagementontherareoccasionswhensystemchallengesoccurwillenablehigherpenetrationsofpassiveDERtobesecurelyintegratedtothegrid,andwillincreasethevalueofDERtothenetwork,thesystemasawholeandultimatelytothecustomer.
Ne
t valu
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$
billio
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Dynamic strategies •Networkmodels/monitoring•Dynamicexportlimits•SmartDER
Additional exports System security
Value release
Self-consumptionPassive energy exports
Static strategies •Exportlimits•AS4777advancedpowerqualitymodes•Traditionalnetworkupgrades•Tariffreform
Sophistication
18
3.4 Capabilities to dynamically manage DER
Implementingdynamiccontrolwouldrequirenewcapabilitiestobedevelopedwithinthedistributionsector,DERvendorsandAEMO.Thesewouldinclude:
» Network modelling and monitoring - whichwouldneedtobeenhanced,particularlyintheLVnetwork.Thiswouldberequiredtounderstandlocalhostingcapacity,determinewhereDERmanagementmayberequiredandwhereDER-relatedconstraintremediationmaybeefficient.
» Advanced planning -wouldberequiredtoconsidernewscenariosthatnetworkplannershavenotneededtoconsiderinthepastsuchasperformanceunderminimumdemandscenariosandunderdifferentenvironmentalconditionse.g.fullorintermittentcloudcover.Plannerswouldalsoneedtoconsiderthepotentialvalueofcustomerexportsinundertakinginvestmentdecisionmaking.
Figure 8: CapabilitiesrequiredtodynamicallymanageDER
» Advancedoperations -wouldberequiredtoundertakemanagementofDERwhereandwhenrequired.
» Active DER -wouldneedtobecapableofreceivingcontrolsignalsfromremoteparty(includingAEMOandnetworks),andbeableto,asaminimumadjusttheiroutput/inputsintimesofemergencyconditions.
Ashighlightedbythefigurebelow,developingthesecapabilitieswouldrequirematerialinvestment,whichwillneedtobeweighedupcarefullyagainsttheincreasedvaluereleasedfromcustomers’DER.
Static Data
AEMO & Transmission System
Network Model
Advanced Operations (Dynamic)
Advanced Planning (Static)
Monitoring (Real time data)
Customer Smart DER
Op
en
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I-b
ase
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inte
rface
s
Forecast Constraints
Distribution Management System
Joint Planning
19
3.5 Flexible Load
Furthertotheseactions,considerationshouldbegiventoensuringthatcustomerswithflexibleload(includingbatteries)areprovidedwithincentivesto:
» UtilisetheirloadtosoakupexcessPVgenerationand/ormakenewinvestmentstoincreaseloadduringlowdemandperiods
» Reducetheirloadatperiodsofhighdemandonthenetworktoreducetheneedtoundertakenetworkaugmentation.
Incentivestoencourageflexibleloadmaybenetworkbasedincentives,networktariffsordemandresponseprogramsthatprovidevaluewhenloadismadeavailable.
Networktariffreformanddemandmanagementisanareaofactiveengagementandexperimentationbydistributionbusinessesandwillnotbeconsideredfurtherinthisdocumentotherthantotheextentthatanyproposedframeworksandmechanismsdevelopedshouldbetestedfortheirapplicabilityandimplicationsfortraditionaldemandmanagementaswellasnewtechnologiessuchasbatteries.
Consultation Questions:
1. ArethereadditionalkeychallengespresentedbypassiveDERbeyondthoseidentifiedhere?
2. IsthisanappropriatelistofnewcapabilitiesandactionsrequiredtomaximisenetworkhostingpotentialforpassiveDER?
3. WhatotheractionsmightneedtobetakentomaximisepassiveDERpotential?
20
4. Maximising active DER potentialMovingfrompassivetoactiveDER,andparticularlybatteries,providesthepotentialformorevalueforthecustomer,networkandthesystem.AnumberofindustryproponentshaverecentlycommencedordemonstratedVPPprojectsincludingRepositPowerwitha250batteryVPPintheACT,AGLwitha1,000-batterytrialinSA,andmostrecently,Teslawitha50,000batteryprojectandSimplyEnergywitha1,200batterytrial,alsobothinSA.
InordertorealisethevaluefromactiveDERthereareanumberofchallengesfordistributionnetworksandsecurityofsupply.Thiswilloccurtoalargeextentbecauseoftheirunpredictability.WhereaspassiveDERbehaviourcanbeforecastwithreasonablecertainty,particularlywhendiversifiedacrosslargenumbersofcustomers,poolpricespikesorrequirementsforFCASresponsecansometimesoccurunpredictablyandwithoutwarning.ActiveDERmayrespondinunpredictablewaystothesesuddensignals.
Onceagain,theseimpactscanoccurinbothlocalnetworksandatsystem-widelevels.
4.1 Local network challenges
Atalocallevel,activeDERcausessimilarissuestopassiveDER.However,theprobabilityofissuesbeingcausedisheightenedduetorapidrampratesandpotentiallyveryhighoutputpowers.
Figure9belowillustratestherapidchargingofbatteriesinpreparationforastormevent,toensuretheavailabilityofback-uppower.Despitecarefuloptimisationbythedistributionbusiness,theresultantdemandapproacheslocalnetworkcapacity.
Further,ifthebatterieshadbeendischargedsimultaneouslywithpeaksolarexportsinresponseto,forexample,aNEMpricespike,localnetworkcapacitywouldhavebeeneasilyexceededinreverseflow,causinglocaldistributionfusestoblow.Eveniflocalnetworkcapacitywerenotexceeded,ramprateswouldfarexceedthespeedatwhichtraditionaldistributionvoltagemanagementtechniquesaredesignedtooperate,resultinginlargevoltageswings.
Figure 9: VPPimpactonnetworkflows
Thermal capacity
Thermal capacity Traditional demandCharging in preparation for storm
Traditional demand+ solar
Traditional demand+ solar + battery+ orchestration
-400
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Pool price spikes during the day present high risk of thermal overload
SAPowerNetworks’SalisburyBatteryTrial.
21
4.2 Security of supply challenges
IftheoperationofactiveDERremainssmall,thenthiswillonlyimpactdistributionnetworksandwillhavenobroaderimplications.Forexample,theSalisburybatterytrialforwhichthedatainearlierchartswastakenonlyhasatotalcapacityofaround300kW.Thisisunlikelytocausesecuritychallengesatasystem-widelevel.
However,thenumberandsizeofVPPsproposedisescalatingrapidly.Forexample,theTeslaVPPisproposedtoreachacapacityof250MW(charginganddischarging).ThisVPPcouldrampupto500MWalmostinstantaneously,ifmovingfromdischargingtocharging(orviceversa).Thishasasimilaroperationalimpacttothetripofalargepowerstation,andexceedsthetypicalcontingencyreservescurrentlyenabledinSouthAustralia.
IftheVPPsarenotmanagedasapartofadispatchprocess,andoperateunscheduled,thiscouldhavethefollowingimplications:
» AEMOwouldhavelittleinformationontheexpectedoperationoftheVPP,particularlyrelatingtoactiveresponsestochangingpowersystemprices.AEMOmayhavesomeabilitytoforecastthisbehaviour,butthelimitedinformationavailablewouldmanifestasescalatingdemandforecasterrorsasVPPsgrow.
» EscalatingforecasterrorswouldneedtobemanagedbyincreasingenablementanduseofregulationFrequencyControlAncillaryServices(FCAS).Thecostsofthisservicearebornebyconsumersandmarketparticipants.
» Large,suddenVPPmovementscouldexceedthecapabilityofregulationreservestorespond,andwouldtriggertheuseofcontingencyFCAStoquicklyrebalancethesystem.ThismeansthatgrowthinactiveVPPsmaycauseincreasingtriggeringofcontingencyFCAS,increasingcostsfortheprovidersofthoseservices.
» VerylargeVPPmovementscouldexceedthecapabilitiesofFCASreservestorespond,andmaythreatensystemsecurity.Forexample,asuddenVPPmovementinSouthAustraliacouldcausealargeandsuddenincreaseinflowsontheHeywoodinterconnector.IftheHeywoodinterconnectorwasoperatingnearitsnominallimits,a500MWmovementcouldbesufficienttoincreaseflowsbeyondthestablelimitsoftheinterconnector.Intheabsenceofemergencyprotectionschemes,thismayleadtoalossofsynchronism,andtripoftheinterconnector.Tomanagethispotentialoutcome,intheabsenceofcoordinateddispatchoftheVPP,AEMOmayneedtolimitflowsontheHeywoodinterconnectortolowerlevelstomakespaceforlargeVPPmovements.Thiswouldhavecoststothemarket.
ThepowersystemimpactwilldependuponthetotalcapacityofactiveDERthatmoves.AsinglemoderatelysizedVPPmaynotproveproblematic,butthesynchronisedmovementofmanysmallerVPPs(perhapsinresponsetothesamepricesignals,weatherevents,orotherstimulus)couldexceedtheabilityofthepowersystemtorespondefficientlyandremainsecure.
ItisclearthereisathresholdabovewhichVPPswillneedtobecomeapartofacoordinateddispatchprocess,tominimiseunnecessarycoststocustomers,andallowefficientandsecurepowersystemoperation.TheprecisecriteriaforVPPparticipationinacoordinateddispatchprocess,andthespecificobligationsindoingso,needtobedefined.
22
4.3 New and emerging DER services
InadditiontoparticipationinthewholesaleenergyandFCASmarkets,activeDERcanalsoprovidearangeofothervaluableservices.Forexample,DERcanprovidevoltagecontrolservices,orcanbeusedtodefertheneedfornetworkaugmentationbylocallysupplyingagrowingload.ThesenewservicescouldformthebasisforemergingDERmarkets.
EmergingDERservicescanbepurchasedbilaterallybyvariouspartiesunderthepresentframework.Forexample,AEMOcanpurchaseDERservicestoassistwithaddressingshortfallsattimeofpeakdemandasapartoftheReliabilityandEmergencyReserveTrader(RERT)mechanism.Distributionnetworkserviceproviders(DNSPs)andTransmissionNetworkServiceProviders(TNSPs)canpurchaseanykindofservicesfromDERthatwouldassistinmeetingtheirobligationsatlowercostthannetworkaugmentation,asnon-networkalternatives.Theseareconsidered“outofmarket”services,sincetheyarenegotiatedandsettledbilaterallybetweenthepartiesinvolved,outsideoftheexistingwholesaleenergyandFCASmarkets.
Inthefuture,itisexpectedthatanaggregatorwillfacilitatenegotiationswiththecustomerandtheDNSPontheservicestobeprovided,andassociatedpaymentsforthoseservices.Thisincludesagreeingontermsandconditions,andanypenaltiesfornon-deliveryoftheservice.DuediligencebytheaggregatorandDNSPisrequired,ensuringthattheservicescanactuallybedeliveredwhenrequired,andarenotlikelytobeinhibitedbydistributionlevelconstraints,oranyothertechnicallimitations.
4.4 Evolving markets for new DER services
Atpresent,thetypesofDERservicesinvolvedarehighlybespoke,andnegotiatedonacasebycasebasis,dependentuponthespecificneedsofthesituation.
Infuture,withgrowingexperienceanddemonstration,someDERservicescouldbecomemorestandardised.Thiscouldallowthecontractnegotiationprocesstobecomefarmoredynamic,withcontractsnegotiatedonanearreal-timebasis.Toensurethatthismarketforservicesdevelopsefficientlyandeffectivelyanumberoffoundationalitemsmayneedtobedeveloped:
1. DNSPs,TNSPsandotherpartiescouldutilisedsoftwareplatformstostreamlinethepurchaseofthedesiredDERservices.Thesecouldinvolveconductinganearreal-timeauctionprocess,resultinginnearreal-timepricesbeingofferedforarangeofDERservices.
2. MarketsvaluingtheservicesfromDERforreactivepower,energy,generationfollowing,ramping,voltagesupportandpeertopeertradingwillneedtobeexpandedorestablished.
3. Aggregatorswouldbeabletooffertheircustomers’DERintomultiplemarkets,perhapssimultaneouslyprovidingDERservicesofdifferentkindstomultipleparties(orprovidingdifferentservicesatdifferenttimes),wheretheyaretechnicallyabletodoso.CustomerswouldalsoreceivethisvalueinadditiontomoderatingtheirDERoperationinresponsetowholesaleenergymarketpricesignals,andpotentiallyfromofferingintoFCASmarkets.Thiswouldallowaggregatorsto“stackthevalue”frommultiplerevenuestreamsforeachDERowner,maximisingthevalueoftheirportfolioinresponsetodynamicreal-timepricesignalsforeachDERservice.
4. Eventually,itmayprovemoreefficienttocoalesceprocurementplatformsintoasingleplatform,facilitatingDERservicesbeingprocuredbyarangeofpartieswithouttheneedforseparateplatforms.
23
Figure 10: EmergenceofmarketsfornewDERservices
Thisframeworkallows“distributionlevelmarkets”toevolveinresponsetoneeds.ThemarketevolutionprocessisillustratedinFigure10.Ifdesired,thisprocesscouldbeacceleratedthroughdemonstrationsandtrials,especiallywheretheseaimtodemonstratenewDERservices,whilststreamliningandstandardisingthecontractsnegotiationprocess.
4.5 Ensuring active DER can reach the market
WeanticipateactiveDERresourceswillbidintotheWholesaleandFCASmarkets,andparticipateincentraldispatch.However,thereareanumberofimpediments:
1. Retailer offers and market platforms-DERownersmaychoosetoworkwithaggregatorsoraggregationplatforms,buttoreachthesemarketsretailers,willultimatelyneedtomakethesevaluestreamsavailable.
2. An understanding of network constraints-AsmoreactiveDERwantstoutilisethedistributionnetworktoaccessthesemarketstheywilllikelycomeupagainstnetworklimits.Understanding,andmanagingperformancewithintheseconstraintswillrequiresimilarcapabilitiestothoserequiredtodynamicallymanagedpassiveDER,however,theymayneedtobeintegratedintomarketprocesses.
Platforms for DER procurement would compliment the new frameworks required for optimisation and coordination
STAGE 1
DNSP contracts
TNSP contracts
AEMO contracts
DNSP procurement platforms
TNSP procement platforms
AEMO procurement platforms
P2P procurement platforms
Emergence of Combined or Centralised procurement
platform
STAGE 2 STAGE 3
DNSPs/TNSPs/AEMOandothersbilaterallyarrangecontractswithDERAggregatorstopurchase
arangeofDERservices
DNSPs/TNSPs/AEMOandothersothersdevelopsophisticatedsoftware
platformstoenabledynamicorautomatedprocurement.
Softwareplatformscoalescetoformcombinedorcentralisedplatform.DERparticipateinrealtimeaccessingdynamicrealtimepricesforarange
ofservices
24
3. A decision making framework–isrequiredthatcandeterminewhetheractiveDERseekingtodispatchfromwithinthedistributionnetworkarelikelytobreachlocalnetworkorsystemconstraints,andifso,whichoftheactiveDERoperatingbehindtheconstraintshouldbedispatched.
Anumberoftechnologyvendorsandretailersareactiveindevelopingaggregationandmarketplatformsandretailoffers.Althoughtheplatformsandoffersarenotyetmature,themarketisdevelopingrapidlyandcompetitionappearstobesufficienttodriveitforward.
Figure 11: AdditionalvaluereleaseenabledbyoptimisationofactiveDER
Consultation Questions:
1. ArethesethekeychallengespresentedbyactiveDER?
2. WouldresolutionofthekeyimpedimentslistedbesufficienttoreleasetheadditionalvalueavailablefromactiveDER?
3. WhatotheractionsmightneedtobetakentomaximiseactiveDERpotential?
4. WhatarethechallengesinmanagingthenewandemergingmarketsforDER?
5. AtwhatpointiscoordinationoftheWholesale,FCASandnewmarketsforDERrequired?
Ne
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Dynamic strategies •Networkmodels/monitoring•Dynamicexportlimits•SmartDER
Orchestration •Marketplatforms•Mediationframework
Additional exports System security
Wholesale market participationNetwork savings
Value release
Self-consumptionPassive energy exports
Static strategies •Exportlimits•AS4777advancedpowerqualitymodes•Traditionalnetworkupgrades•Tariffreform
Sophistication
25
5. Frameworks for DER optimisation within distribution network limitsDistributionnetworkbusinessesareresponsibleforoperatingandmaintainingtheirnetworkwithintechnicalandsafetyrequirements.AEMOisresponsibleforgridreliabilityandsystemsecurityandoperatingthemarket.ThekeyissuesbeingconsideredinthisconsultationpaperishowbesttointegrateDERintothegridandmarketandsecondly,howbesttoundertaketheeconomicsdispatchofDERatthedistributionleveltoinformbroaderoptimisationofthesystemandmarketbyAEMO.
Thissectiondiscussesthehighlevelfunctions,rolesandresponsibilitiesrequiredtocoordinateDERoptimisationwithindistributionnetworklimits,notingAEMOisresponsibleforoptimisationofresourceswithintransmissionlimits.ThepresentframeworkforDERtoaccesstheNEMisoutlinedfirst,followedbythehighlevelfunctionsrequiredandoptiontofacilitateDERoptimisationanddispatchwithindistributionnetworklimits.
5.1 The present framework
Beforediscussingpossiblelong-termframeworksforDERdispatchandoptimisation,it’susefultodescribethepresentsystemarchitectureforthisfunctionality.
Currently,DERhaslimitedopportunitytoparticipatedirectlyinthemarket.Thecurrentmarketarrangementshavebeendesignedaroundtraditionalsourcesofsupplyandthetransmissionsystem(withintransmissionlimits),whichwaswheretheelectricitygeneratingunitswere,withretailersrepresentingthecustomerbaseinanenvironmentofonewayflowfromthelargegeneratingsystemtothecustomersite.
Thekeyfeaturesofthecurrentmarketarrangementsinclude:
» Economic dispatch -Inthecurrentmarketframework,marketcustomers(i.e.transmissionconnectedloadsorretailers)orgeneratingunitsabove30MWoperatedirectlyinthemarket.Thereistheconceptofasmallgeneratoraggregators,whichallowssmallgeneratingunitstoparticipateinthemarket,butonanon-scheduledbasis.Unitsbelow5MWareexemptfromregisteringorparticipatinginthemarket.Thirdparties,likeaggregators,cannotdirectlyparticipateinthemarketwithoutbecoming,oraffiliatedwitharetailer.Duringreal-timedispatch,theretailerwillmoderatetheoperationofthecustomer’sDER(withinthetermsoftheiragreementwiththecustomer),tomaximisevaluetotheretailer’sportfoliointhewholesalemarket.Alternatively,thecustomermayelecttoestablishanewconnectionpointandNationalMeterIdentifierforacomponentoftheirload(suchasanelectricvehiclechargingpoint),andcouldallocateanewretailerforthatcomponentoftheirload,toactastheaggregator.WholesalemarketsettlementsaremanagedbetweenAEMOandtheretailer,withtheretailerundertakingbillingarrangementswiththecustomer(incorporatingnetworkfeesandothercharges).Theretailer’sbillingmayincorporateadditionalcustomerrewardsfortheactivationofDERcontracts,orthismaybesettledseparatelybetweenthecustomerandtheaggregator.
26
» Ancillary services -generatingunits(notasmallgeneratoraggregator)togetherwithloads(directtransmissionconnection,retailers,oraggregatorDRprovider(marketancillaryserviceprovider))canofferancillaryservices.Inmid-2017,AEMOimplementedrulechangesthatenabledunbundlingtheprovisionoffrequencyservicesfromretail,andtheconceptofanaggregatorwasintroduced.TheAEMCiscurrentlyreviewinghowbesttointegrateDERintotheancillaryservicesmarket.
» Network support -supportagreementscanbenegotiatedbetweentherelevantnetworkserviceproviderandtheaggregator/retailer/customerfortheprovisionofservicestomanagetheirnetworks.Theseagreementsarelargelybespoke.WiththegrowthofDER,therewillbeagreaterneedfornetworkbusinesstolookatnetworksupportservicesfromDERtomanagevoltage/networkissuesordeternetworkinvestment.Therearerestrictionsonanetwork’sabilitytodirectlyparticipateinthemarketnotingitisearningaregulatedreturnonitsmonopolyassets.
» Emergency reserve -thecurrentmechanismfortheprovisionemergencyreserve,RERT,istechnologyandresourceneutral.DERcanofferemergencyreserve.Itwasdesignedtobeusedrarelyandthereforethecontractarrangementsarelargelybespokeinnatures.Processesareintraintodevelopstandardisedproducts.
WhiletheaggregatesizeofDERremainssmall,andwhileAEMOhastheabilitytoadequatelyforecastDERbehaviour,DERoperationcanbeunscheduledwithnoneedtoparticipateinthecentraldispatchprocess.However,whenthequantitybecomeslarge,anditisdeemednecessaryforadequatepowersystemoperationandsystemsecurity,AEMOcanrequiremoreparticipationinthecentraldispatchprocess.Thismayincludeprovidingbidsandreceivingdispatchtargets,providingreal-timetelemetry,andinclusioninconstraintequations.
Notably,inalloftheseexistingframeworks,theDNSPhasnoformalinvolvementintheprocess,outsideofpossibleengagementintheoriginalconnectionoftheDERdevice.Thismeansthattherearenoformalarrangementsinplaceatpresenttomanagedistributionlevelconstraints,andensurethatDERdispatchremainswithindistributionnetworktechnicallimits.Thisimportantgapneedstobeaddressedinfutureframeworks.
Figure 12: thepresentframeworkforDERdispatchinthemarket.
DER owner
Aggregator
Wholesale market settlements
Billing
Provides details via DSP Information Portal
Agreement on services to be provided
Agreement on services to be provided
Activates DER
Include in forecasts, identify security challenges
FRMP (Retailer) DNSP AEMO
27
5.2 Functions required in future frameworks
Highlevelfunctionsrequiredfordistributedleveloptimisationaresummarisedinthefigurebelow.
BothFigure13andTable1indicatethepotentialallocationofresponsibilitiesforeachofthesefunctions,andthemajorityofthefunctionsappeartoalignwellwithexistingparties.
Figure 13: Highleveloverviewofkeyfunctionsfordistributionleveloptimisation
Moredetailedanalysisandconsiderationisrequiredtoassesswhocoulddelivertwoofthekeyfunctionsmosteffectivelyforcustomers,thedistributionleveloptimisationanddispatch,andtheforecastingsystems.Section5.3explorestheallocationofresponsibilityforthedistributionleveloptimisationanddispatchfunctionspecifically.
Inadditiontoviablelong-termframeworksformanagingdistributionnetworkconstraintsinthereal-timedispatchofDER,thesuccessfulintegrationofDERwillalsorequireawiderangeofotherdevelopments,includingmarketframeworks.
Distribution Level Market functions
AE
MO
DN
SP, A
EM
O
or
3rd
part
yD
NS
PA
gg
reg
ato
r/re
taile
rD
ER
Ow
ne
rs
11. DER Register (Standing Data)
1. Distribution system monitoring and planning
Install DER
7. Wholesale-distribution optimisation
8. Distribution Network Services (currently bilateral contracts)
4 & 5. Aggregator/retailer DER bidding and dispatch
Operate DER
6. Distribution level optimisation
2. Distribution constraints developement
3. Forecasting systems
10. Data and Settlement (Wholesale and FCAS)
9. Financial Settlement (Network Services)
28
Table 1: SummaryofkeyfunctionsinDERoptimisation
Function Description Owner
1.Distributionsystemmonitoringandplanning
Enhancedfunction:distributionnetworkmonitoringtoinformdistributionnetworkconstraintdevelopment
DNSP
2.Distributionconstraintsdevelopment
Newfunction:todevelopdistributionnetworkconstraintsthatwillbeakeyinputintothedistributionleveloptimisation.
DNSP
3.Forecastingsystems
Newfunction:providekeyforecastinginformationtoallowfordistributionleveloptimisation–maybeavailabletomarketparticipants
DNSP,AEMO,ornewthird-Party
4.AggregatorDERbidanddispatch
Newfunction:AggregateslocalDERinstallationstoprovidebidsintotheenergy,FCASandNetworkMarkets(throughdistributedleveloptimisation)
Third-Party:NewParticipantcategory
5.RetailerDERbidanddispatch
Enhancedfunction:RetaileraggregatescustomerDERinstallationstoprovidebidsintotheWholesaleMarketforscheduledgeneration,scheduledload,FCASandNetworkMarkets
Retailer
6.Distributionleveloptimisation
Newfunction:optimisedistributedlevelresourcedispatchwithindistributionnetworkconstraints,toestablishanaggregatedbidstackforDERperareathatcanfeedintowholesaleoptimisation.DispatchDERonceaggregateddispatchsignalreceived.
DNSP,AEMO,ornewthird-Party
7.Wholesale-distributedoptimisation
Integratedistributedleveloptimisationresultsintoexistingwholesalemarketoptimisation.
AEMO
8.DistributionNetworkServices
Enhancedfunction:Distributionnetworkservices,suchaspowerquality/voltagecontrol,whichcanbeprovidedbyaggregatedDER,eitherthroughbilateralcontractsorpotentialthroughanoptimization
DNSP
9.FinancialSettlements(NetworkServices)
Enhancedfunction:financialsettlementofdistributednetworkservicesdispatchedNetworkMarket
DNSP,aggregator/retailer
10.Data&Settlement(WholesaleandFCAS)
Enhancedfunction:AEMOsettleswholesaleanddistributedleveltransaction.AEMOalreadysettlestheexistingmarkettotheNMI
AEMO
11.DERRegister Newfunction:AEMOtoprovideDERregisterbasedonAEMCrulerequirements.
AEMO
29
5.3 Principles for framework design
Informingtheseconsiderationsarethefollowingkeyprinciples:
1. Simplicity,transparencyandadaptabilityofthesystemtonewtechnologies
2. Supportingaffordabilitywhilstmaintainingsecurityandreliabilityoftheenergysystem
3. Ensuringtheoptimalcustomeroutcomesandvalueacrossshort,mediumandlong-termhorizons–bothforthosewithandwithouttheirownDER
4. Minimisingduplicationoffunctionalitywherepossibleandutilisingexistinggovernancestructureswithoutlimitinginnovation
5. PromotingcompetitionintheprovisionandaggregationofDER,technologyneutralityandreducingbarrierstoentryacrosstheNEMandWEM
6. Promotinginformationtransparencyandpricesignalsthatencourageefficientinvestmentandoperationaldecisions
7. Lowestcost.
5.4 Responsibility for distribution level optimisation and dispatch
WhenDERpenetrationsreachveryhighlevels,improvedframeworksforsystemdispatcharerequiredthatallowDERdispatchtobeoptimisedwithindistributionnetworktechnicallimits.Asoutlinedabove,thisisanewfunctionalitywhichnoorganisationisperformingatpresent.Theoptionsarepresentedinthefollowingsection.
5.4.1 Single Integrated Platform; AEMO central platform and optimising dispatch taking into account transmission and distribution network constraints
Underthismodel,AEMOprovidesacentralplatformthatinterfaceswithaggregatorsfortheprovisionofDERservices–thereforeprovidingdirectaccesstothemarket.AggregatorswouldprovidebidsandoffersdirectlytoAEMOviathisplatform.Eachdistributionnetworkbusinesswouldalsobeconnectedtothecentralplatform.
Figure 14: SingleIntegratedPlatform:AEMOcentralplatform
DER owner
Aggregator
Financial settlements
DER bids ($/q)
Billing
Dispatch instructions
Real time operational Data
Activates DER
NEMDE dispatch
Aggregates bids taking
into account network
constraints
DER bids
Dispatch instructions
FRMP (Retailer)
AEMO Market
Platform
DNSP(s)
AEMO
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Toconsiderlocalnetworkconstraints,AEMOwouldoptimisetheresourcestakingintoaccountlocalnetworkconstraintsprovidedbythedistributionnetworkbusiness.
Inrealtime,aggregatorswouldprovidebidstoAEMOrepresentingtheirdispatchpreferences.AEMOwouldoptimisethedispatchofDERbaseduponthosebids,takingintoaccountlocalnetworklimitsandtransmissionnetworklimits.AEMOwouldprovidedispatchschedulestoaggregators,whowouldthenactivatetheircustomer’sDER.
SettlementswouldremainbetweenAEMOandmarketparticipants.Thedistributionnetworkbusinesscouldalsousethecentralplatformtoseeknetworksupportservicesfromaggregators.
Theadvantagesofthismodelare:
» Itallowsaggregatorsoperatinginmultipleregionstointeractwithasingleentity(AEMO)viaacentralplatform.
» ItmeansthatfunctionsfordispatchofDERwouldneedonlybemaintainedbyoneorganisationasopposedtomultipleorganisations.
» ItallowsDNSPstotakeresponsibilityformanagementofDERintheirownnetworks.DNSPsarebestplacedtounderstand,quantifyandmanagethelimitsoftheirownnetwork,andthismodelpotentiallylimitsduplicationofresourcesatotherorganisationstoattempttofulfilthisrole.
» ItrequiresalotofthedispatchprocesstobecoordinatedbetweendistributionbusinessandAEMO–seamlessfortheinterfacingaggregator.
» AEMOisindependentandunbiasedinfacilitatingthedispatchprocess.
» AEMOalreadyperformsthistypeofroleatthewholesalelevel,andcaneseemasanextensionofthewholesalemarket.
However,someimportantdisadvantagesarealsoapparent:
»Amulti-stageoptimisationwilllikelyberequired,firstdealingwithcomponentsofthedistributionsystem,aggregatingtoasingledistributionnetwork,thenbeingaggregatedtotheNEMDEprocessatasystemlevel.
»TheinterfacebetweendistributionnetworkserviceprovidersandAEMOaroundthecommunicationofreal-timenetworkstatusandreal-timedistributionnetworkconstraintswillbecomplexanddifficulttomanage.
»ThiswouldrepresentanexpandedroleforAEMO,whichwillrequireexpandedresources.AEMO’sfundingmodelmayneedtobeadaptedtofitthisexpandedrole.
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5.4.2 Two Step Tiered Platform; DNSPs optimising distribution level dispatch
ThismodelinvolvesDNSPstakingresponsibilityforoptimisationofDERdispatchwithintheirownnetworks.ApossibleprocessisillustratedinFigure15.Inthismodel,aggregatorswouldprovidebidstotheDNSP,representingtheirdispatchpreferences.TheDNSPwouldaggregatethesebids,takingintoaccountanydistributionnetworkconstraintsthatmaypreventDERoperation.Forexample,iftwoaggregatorsoffer1MWeachbehinda1.5MWnetworkconstraint,withoneofferingat$5/MWh,andthesecondofferingat$6/MWh,theaggregatedbidwouldshowavailabilityof1MWat$5/MWh,and0.5MWat$6/MWh.Theremaining0.5MW(offeredatthehigherpriceof$6/MWh)cannotbedelivered,andsowouldnotfeatureintheaggregatedbid.
TheDNSPswouldaggregatebidsfromallactiveDERintheirnetworks,thenpasstheseaggregatedbidstoAEMOassociatedwitheachtransmissionconnectionpoint.AEMOwouldthenincludetheseaggregatedbidsintheNEMDEdispatchoptimisation.
TheaggregateddistributedresourceswouldappeartoNEMDEasasinglevirtualgeneratororscheduledloadlocatedatthetransmissionconnectionpoint.
AEMOwouldcalculatedispatchtargetsateachtransmissionconnectionpoint,andcommunicatethesetotheDNSP.TheDNSPwoulddisaggregatethesedispatchtargetstoeachaggregator,basedupontheirrespectivebids(withthelowestpricedoffershavingthemostaccesstonetworkcapacity).Aggregatorswouldthenactivatetheircustomer’sDERtomeettherequireddispatchtargets.
SettlementswouldremainbetweenAEMOandtheretailer,asperthepresentsystem.SettlementsarealreadycalculatedatanindividualNMIlevel,andtheexistingrevenuemeteringsystemwouldincorporatethemoderatedoperationofDERbehindeachcustomer’smeter.
Theadvantagesofthismodelare:
» ItallowsDNSPstotakeresponsibilityformanagementofDERintheirownnetworks.DNSPsarebestplacedtounderstand,quantifyandmanagethelimitsoftheirownnetwork,andthismodelpotentiallylimitsduplicationofresourcesatotherorganisationstoattempttofulfilthisrole.
Figure 15: TwoStepTieredPlatform;DNSPsoptimisingdistributionleveldispatch
DER owner Aggregator
Financial settlements between FRMPs and AEMO
Billing
Real-time operational
data
Allocate dispatch among DER providers
Aggregate bids, taking into
account distribution
network constraints
Allocate dispatch among
aggregators, according
to bids
Communicate dispatch at
each transmission connection
point
Communicate dispatch for each
aggregator
Provide aggregated bids at each transmission connection point ($/q)
Provide bids ($/q)
Agreement on services to be provided
Activates DER
Determines dispatch in NEMDE
FRMP (Retailer)
DNSP AEMO
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Figure 16: iDSOoptimisesdistributionleveldispatch
DER owner Aggregator
Wholesale market settlements
Real-time operational
data
Allocate dispatch among DER providers
Aggregate bids, taking into account distribution network limits
Aggregate provides bids, iDSO delivers dispatch
schedules
Allocate dispatch among aggregators, according to bids
DER schedules
Real time network status,
operational forecasts
iDSO provides aggregated bids at each transmission connection point
Agreement on services to be provided
Activates DER
Optimise dispatch at each transmission
connection point
NEMDE dispatch
FRMP (Retailer) DNSP
iDSO
AEMO
» Itmayfacilitateamoredecentralisedoperationofdistributionnetworks,allowingoperationalstrategiesthatmanage“fringeofgrid”operationswithouttheneedforconstantcentralisedcontrol.Thismayassistwithmanagingtheextremedegreeofcomplexityinvolved.
Thedisadvantagesare:
» DNSPsdonothaveanyexistingexperiencewithreal-timedispatchprocesses,andhavelimitedrequirementsforreal-timemanagementoftheirnetworkswithrespecttonon-networkassets.DNSPswouldneedtoestablishthiscapability.
» TheinterfacebetweenDNSPsandAEMOaroundthecommunicationofaggregatedbidsinreal-timewillneedbecarefullydesignedtominimisecomplexity.ThismodelmaycausechallengesinintegratingNEMDEoptimisationwithdistributionnetworkoptimisation,sincetheywillbeseparateprocessesoperatedbyseparateentities.
» DNSPsmaynotbeperceivedasadequatelyindependentandunbiasedtofulfilthisrole.Modelsformanaginganypotentialconflictsofinterestwithring-fencingcouldbeconsidered.
ThiswouldrepresentanexpansionoftheroleofDNSPs,whichwillrequireanexpansionofresources,andchangethewayinwhichDNSPsarecurrentlyfunded.
5.4.3 Independent DSO or AEMO optimising distribution level dispatch
Thethirdstraw-manoptionisillustratedinFigure16.Inthismodel,anindependentdistributionsystemoperators(iDSOs)isrequiredtotakeontheresponsibilityofoptimisingDERdispatchwithindistributionnetworktechnicallimits.ThisrequiresestablishingaseparateiDSOforeachdistributionnetwork,orasingleiDSOfortheNEMandWEM.
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TheindependentDSOmodelwouldoperatesimilarlytoDNSPoptimisationprocessdescribedabove,butwithaggregatorsprovidingbidstotheiDSO,andtheiDSOaggregatingthosebidstoeachtransmissionconnectionpoint,takingintoaccountdistributionnetworklimits.TheiDSOwouldpasstheseaggregatedbidstoAEMOtoincludeintheNEMDEcentraldispatchprocess.
Thismodelprovidesanalternativetothepreviousoptionsinthatitallowssomedegreeofdecentralisation.Asanindependentparty,theiDSOisasingleentitytakingentireresponsibilityforthecomplexdispatchtaskataDistributionlevel,butwithouttheconcernsaroundconflictsofinterestinherentinOption2.However,thisisthemostcomplexofthemodelsdescribed,involvinginterfacesbetweentheiDSOandDNSP(tosharereal-timenetworkstatusanddistributionnetworkconstraints),andcomplexinterfacesbetweentheiDSOandAEMO(attemptingtoco-optimiseresourcesinamulti-stageprocessacrosstwodifferentorganisations).
FortheiDSOtooperate,newindependentorganisationswouldneedtobeestablishedineachdistributionnetworkarea,withassociatedapproachesdevelopedforfundingthoseorganisations.Theywouldneedextensivecapabilitiesintheinterpretationofnetworklimitadviceandthedevelopmentofconstraintequations,potentiallyduplicatingthesecapabilitiesatDNSPsandAEMO.
Complexandcrucialinformationflowswouldneedtobeestablishedinreal-timebetweenDNSPsandtheiDSOs(tocommunicateoperationalforecasts,networkstatus,andsoon),aswellasbetweeniDSOsandAEMO(tocommunicateDERbidsandschedules).Itisunclearwhetherintroducingthislevelofcomplexityandassociatedcoststocustomerstoestablishwouldbewarranted.
Consultation Questions:
1. Howdoaggregatorsbestseethemselvesinterfacingwiththemarket?
2. Havetheadvantagesanddisadvantagesofeachmodelbeenappropriatelydescribed?
3. Arethereotherreasonswhyanyofthese(oralternative)modelsshouldbepreferred?
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6. Immediate actions to improve DER coordinationThisconsultationpaperpresentsoptionsforlongtermframeworksformanagementofDERoptimisationanddispatch,andtheevolutionofnewDERmarkets.Theseframeworksrepresentapotentiallyconsiderablechangetothepresent,andarelikelytorequireextensiveconsultationandlengthyimplementationtimes.However,moreimmediateactionsarerequiredtomitigateemergingchallengesrelatedtolargeDERprojectsandlocalisedissuesassociatedwithgrowingresidentialscaleDERpopulations.Thefollowingmeasuresaresuggestedas“noregrets”actionswhichcouldstreamlinetheDERtransition,andprovideasteppingstonetofutureframeworks,regardlessofwhichiseventuallyimplemented.
TheactionssuggestedhereareconsistentwiththestageapproachoutlinedintheElectricityNetworkTransformationRoadmap,whichexploredtheneedforatransitionfromrelativelysimpleprocesses,todevelopmentofnewfunctionalityovertime.
Thesuggested“noregrets”actionsthatshouldbeexploredandimplementedinparallelwithconsiderationoftheabovedescribedlongertermframeworksareasfollows:
» Review of registration frameworks -TheframeworksforregistrationofaggregatedDERneedreview.Atpresent,thereisnocategorysuitablefortheregistrationofalargeaggregatedDERproviderwhichwouldfacilitateparticipationinthecentraldispatchprocess.Clearlydefinedcriteriaforparticipationarerequired,withclearlydefinedobligationsthatapplyinthatcase.
» AEMO to develop criteria for participation of VPP in central dispatch -Capacitythresholds(MW)maynotadequatelydefinethepointatwhichsystemsecurityandoperationnecessitatesscheduling,particularlywheremultiplesmalleraggregatedgroupsofDERarebehavinginsynchrony.
» Expanding information exchange between DNSPsandAEMO-Akeyrequirementofenhancedoperatingarrangementsisthattheyfacilitatetheeffectiveexchangeofinformationbetweentransmissionanddistributionincludingbothprovidingthebestpossibleinformationfromthedistributionnetworksinallplanninghorizonsincludingreal-timeoperationtoassistAEMOcarryoutitsfunctions,andthecoordinationofservicesincludingdemandcontrolandresponsethatwillallowdynamiccontroltobeeffectivelyutilisedfortheentiresystembenefit.
Theprovisionofaccuratedatawillrelyonthedevelopmentofmoresophisticatedforecastingapproaches.
» Piloting and testing -Pilotingandtestingaggregation,marketandmediationplatformsbeforetheybegintoimpactoperatingframeworks.ItispossibletodevelopinitialarrangementsthatcanachievemuchoftheearlyvaluefromeffectiveoptimisationandcoordinationoperationofDERwhereitismostvaluable,butdoesnotcompromisethesubsequentdevelopmentofanoperatingframeworkthatfitsintoapotentiallydifferentmarketstructure.Thismayincludethepilotingofmoreactivedemandresponsemechanisms.
» Sharing information relating to bilaterally providedDERservices-Thenatureoftheservicestobeprovidedshouldbenegotiatedbetweentheaggregatorandtherelevantparties(withintheaggregator’sagreementswiththeirDERcustomers).
TheseagreementscouldbecommunicatedtoAEMOusingtheDSPinformationportalallowingAggregators,DNSPsandTNSPstoshareinformationwithAEMOoncontractedDER.AEMOandtheDNSPcouldthenliaisetoidentifyandaddressanypotentialsystemsecuritychallengesatthedistributionorsystemlevel,andimplementanyrequiredmeasures(suchasdefiningconstraintequationsthatmaintaintheDERdispatchwithinsecurethresholds).
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» Building understanding of network constraints -CurrentlymanydistributionbusinesseshaveonlylimitedunderstandingastohowmuchDERcanbeconnectedtotheirnetworkswhilststillmaintainingtheperformanceofthenetworkandqualityofsupplybasedonquantifiablefactorsincludingthermal,voltagecontrol,powerqualityandrelayprotectionlimits.
InordertoinformandexecuteoptimalstrategiestomaximiseDERvaluerelease,networkhostinglimitsmustbewellunderstood.Althoughanumberofapproachesarepossible,thisislikelytorequireexpansionofcurrentnetworkmodellingandmonitoringcapabilitiesintolowvoltage(LV)networks.ItmayalsorequiremoreactivemanagementofLVnetworksthanDSNPshavetraditionallyundertaken.Developmentofthiscapabilitywillhoweverenable:
» MoreaccurateindicationstobeprovidedtoprospectiveDERprovidersandcustomersastowheretheycanmostreadilyconnecttothenetwork
» Moreefficientconnectionprocesses
» Developmentandexecutionofthemosteconomicshort-termstrategiestoincreasehostingcapacity
» Ultimately,near-realtimeconstraintassessment,enablingthemoresophisticatedvaluereleasestrategiesasdiscussedinthispaper.
Arelativelysimpleanalysisapproachmaybeusedinitially,butwithadditionalsophisticationbeingappliedovertimeasexperienceisgained.
» Standards for DER monitoring and management -DERsareemergingthatarebecomingsmarterandabletochangetheirprofilesorconsumptionpatternsinresponsetosomeformofremotesignalingorcontrol.AsthenumbersofsmartDERsgrows,itisessentialthattechnicalstandardsandprotocolsaredevelopedtoencourageinteroperabilityincludingstandardisedcommunicationprotocols.ThisisimportanttoensurethatfleetsofDERscanbecoordinatedandoptimisedasoutlinedearlierinthispaper.Failuretostandardisetheconnection,operationandinteroperabilitywilllikelyresultinthefailedopportunitytomaximisethecapabilityofgrowingDERcapabilitybutintheworstcasecouldresultinlowvisibilityofandreducedcapabilitytooptimisegrowingrangesandnumbersofDERs-leavingthepotentialforfurtherDERvaluereleaseunabletobetapped.
Consultation Questions:
1. ArethesetherightactionsfortheAEMOandEnergyNetworksAustraliatoconsidertoimprovethecoordinationofDER?
2. ArethereotherimmediateactionsthatcouldbeundertakentoaidthecoordinationofDER?
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7. Next Steps7.1 Collaboration
AtatimeofunprecedentedchangeacrossAustralia’selectricitysector,industrywidecollaborationisessentialtodeliverthemostefficientpathwaytofacilitatethistransition.
Informingtheseconsiderationsarethekeyprinciples:
1. Simplicity,transparencyandadaptabilityofthesystemtonewtechnologies
2. Supportingaffordabilitywhilstmaintainingsecurityandreliabilityoftheenergysystem
3. Ensuringtheoptimalcustomeroutcomesandvalueacrossshort,mediumandlong-termhorizons–bothforthosewithandwithouttheirownDER
4. Minimisingduplicationoffunctionalitywherepossibleandutilisingexistinggovernancestructureswithoutlimitinginnovation
5. PromotingcompetitionintheprovisionandaggregationofDER,technologyneutralityandreducingbarrierstoentryacrosstheNEMandWEM
6. Promotinginformationtransparencyandpricesignalsthatencourageefficientinvestmentandoperationaldecisions
7. Lowestcost.
Withthisinmind,weareseekingtoengagewithstakeholdersthroughoutthisconsultationprocesstodeveloptwokeydeliverables:
1. AFirstSteps–No-regretsactionsreportinlate2018
2. AcomprehensiveDSOWhitepaperin2019.
Basedontheoutcomesofthispublicconsultation,theproposedWhitePaperwillidentifyapreferredhigh-levelframeworkthatidentifiesthesuiteofservicesthatwillneedtobeprovided,andthesystemcomponents,rolesandcapabilitiesthatwillberequired.Thiswilllikelyleadtorecommendationsregardingsystemrequirements,possibletrials,identificationofpotentialrulechangestotheAEMC,andthepossibleconsiderationofinitiationoflargerreviewsonlongertermframeworks.Itshouldbenoted,thattheAEMCarelookingatutilisingthisprojecttopotentiallyinformanyregulatorychangesthatmayberequiredinrelationtoDERpenetration,access,connectionsandchargingframeworks.
7.2 What we need from you
Weinvitepartners,customers,innovators,businesses,policymakersandthewiderindustrytosharetheirviewsonhowDERvaluereleasecanbemaximised.Wehaveposedanumberofquestionsthroughoutthisdocument,andsomeoverarchingquestionsattheendofthissection.Weaskforyourthoughtsandfeedbackonthesequestions.
Ourconsultationwillrununtil3August2018,andweurgeyoutotakepart.Inadditiontothispaperweplantoundertakeaseriesofindustryworkshopsandengagementsessions.
Pleaserespondtoourconsultationquestionsandprovidewrittencommentsandfeedbacktoinfo@energynetworks.com.aubythe3August2018.
Also,looktoourwebsitewww.energynetworks.com.aufordetailsofanyproposedworkshops.
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