With virtual power plants (VPP) offering outcomes such as lower energy prices, increased grid stability and protection during outages, it’s no wonder that the rollout of what could be the world’s largest VPP has had an overwhelmingly positive response in South Australia. Energy spoke to Scott Oster, Director Projects at the South Australian Department for Energy and Mining, for an update on the ground-breaking project and what it could mean for the energy industry in Australia.
According to Mr Oster, the SA Government has been working on addressing a number of challenges in the state’s energy system in recent years.
In 2017, $150 million was allocated, through the Renewable Technology Fund, to fast-track South Australia’s energy transformation by specifically targeting projects that further integrated renewables into the State’s power system and were likely to have the greatest impact on energy pricing.
Tesla submitted one of more than 80 applications received through the Fund with a proposal for a VPP.
“The project was designed to provide the benefits of solar and storage to customers who traditionally would be unlikely to be able to afford such technology to manage some of their energy costs, and demonstrate the technical capability and commercial viability of distributed energy resources of providing grid services.” Mr Oster said.
With the support of the SA Government, Tesla are targeting a network of potentially up to 50,000 home solar PV and Powerwall battery systems across South Australia.
The rollout of these systems started with a two phase trial to provide 1,100 Housing SA households with home energy systems.
Phase I, the installation of 100 home energy systems, has already been delivered, with an additional 1,000 to become operational by the end of 2019 as part of Phase II.
The decision to start the SA VPP project as a trial has allowed Tesla and the SA Government to try things that were unproven before the project commenced.
“Some of the results we are seeing are really exciting. We’re really proud to be a part of this project,” Mr Oster said.
According to Mr Oster, Tesla has been a fantastic project partner throughout the trial.
“While it’s Tesla’s project they’ve been 100 per cent supportive of working with government to help us meet our objective of delivering cheaper energy to customers who need it most, and we’ve similarly helped them tackle some of the technical and commercial challenges. It’s been really successful, a great partnership.”
The target audience for the trial phase of the project was predominantly low income families, for whom energy affordability is a key concern.
Working with Housing SA households has allowed Tesla and the SA Government to tangibly see the benefits that the VPP can provide to customers both financially and in terms of reliability.
“There are quite significant benefits to those customers, with no upfront cost for the installation of the home energy system.
What we’ve been able to achieve with this project is that they can receive the lowest retail rate that’s available to residents in SA, and also get the added benefit of the backup of the battery installed on their property in the event of an outage,” Mr Oster said.
Another way the project is benefiting customers is by increasing the visibility of their energy use. This is done through the Tesla app where customers can monitor their home energy system in real time, and view their energy usage history.
Mr Oster said that this is giving customers a more active role in managing their energy consumption.
“I think people are interested in knowing more about how much energy they use and being able to make decisions about their usage. Having that information and being able to make those choices has been really important to some of our customers,” Mr Oster said.
In order for South Australians to take part in the trial and experience these benefits, the SA VPP program invited residents of South Australia to register their interest. Since the initiative was announced, it has received a huge 41,000 online registrations of interest.
Mr Oster said that this demonstrates the high degree of interest among South Australians in addressing some of their energy affordability challenges.
“South Australians have in recent years been exposed to some of the highest electricity prices anywhere in the world. It’s a key priority for the government in South Australia to bring around affordability measures for South Australian energy consumers, and particularly low income households, so it’s certainly been a welcome initiative,” Mr Oster said.
With Phase III potentially rolling out to 49,000 more households, the project could very likely become the world’s largest VPP. At a time where climate policy often comes under scrutiny in Australia, this would be an exciting step in the right direction.
“I think South Australia has always had really strong credentials, particularly in renewable energy. Tesla has now launched the Tesla Energy Plan, a VPP offer to private customers, so we’re already seeing the program expand beyond the trial, even though we haven’t formally closed out phase two yet.
“We’re pretty excited about it. There’s no doubt that South Australia is proud to be the location of not just this VPP, but a number of VPP offerings.
AGL and Simply Energy have both undertaken VPP trials in South Australia that are now available more widely. Sonnen offer a VPP through their SonnenFlat product and recently ShineHub launched their VPP into the market.
So there are a number of offers currently in South Australia, there’s no doubt that we’re leading nationally, and internationally, in this space,” Mr Oster said.
The impact to the industry
Initial results for the project are looking really promising. In addition we are seeing increased interest in VPPs from retailers as well as technology providers, which we are expecting to lead to further growth and positive outcomes for consumers and the broader energy industry in Australia.
The SA Government has since launched the Home Battery Scheme; a $100 million commitment over four years to install 40,000 batteries across South Australia.
“What we’re seeing is a number of parties coming to market with retail offerings leveraging the Home Battery Scheme. So for customers that have their own home energy system, they can receive even more value by enrolling their battery in a VPP program.
“The SA Government’s very supportive of that, and we look forward to working with these VPPs to help customers achieve even more savings through the installation of storage on their property.”
According to Mr Oster, it’s important for traditional energy suppliers to look at the success of initiatives such as the SA VPP to consider how they can create positive change.
Many retailers are already starting to actively engage in the space.
“One of the first VPP trials was through AGL. As I mentioned, Simply Energy also have a VPP offer available in SA, along with ShineHub and Sonnen. While a lot of these projects are still in a trial phase, there’s no doubt some of the revenue streams that are now possible by providing network services via VPPs can deliver more value back to customers.
“Once they’re better known and understood, I’d expect that these offerings will continue to grow and provide additional retail competition and downward pressure on energy prices certainly in SA, but also nationally,” Mr Oster said.