Rooftop solar panels, batteries, electric vehicles and microgrids are transforming Western Australia’s electricity system. These small-scale devices, known as Distributed Energy Resources (DER), present challenges and opportunities for the way electricity is produced, managed and consumed in the state.
In response to these challenges, the government has developed a DER Roadmap to ensure it can integrate growing levels of distributed resources into the state’s electricity systems in a safe and secure way.
Western Australian Energy Minister, Bill Johnston, released the state’s Distributed Energy Resources Roadmap, produced by the government’s Energy Transformation Taskforce.
The DER Roadmap is an Australian-first, five-year plan that outlines the actions the Western Australian Government must take over the next five years in order to meet these challenges and harness the potential for cleaner, more affordable energy.
Actions will include pilots to determine the best ways to overcome technical, regulatory and market barriers to integrate DER into the South West Interconnected System (SWIS), including additional community batteries.
The Roadmap has been developed with significant input from industry, and will be implemented with collaboration from Energy Policy WA, Western Power, Horizon Power, Synergy and the Australian Energy Market Operator (AEMO).
A leader in sustainable energy
DERs are devices that can either use, generate or store electricity, and form a part of the local distribution system, serving homes and businesses. DERs can include renewable generation such as rooftop solar photovoltaic (PV) systems, energy storage, electric vehicles (EVs), and technology to manage demand.
Customers in the SWIS are installing DERs at outstanding rates. Now, almost one in three households in the SWIS have a rooftop solar PV system installed, with around 2000 households adding a new system each month.
Customers choosing to install DERs are already enjoying the benefits of lower electricity bills, and are contributing to decarbonising the power system. As DER capabilities improve and technology costs continue to fall, customers will be able to enjoy new and greater benefits from their DER.
DERs also offer additional opportunities that complement and amplify the benefits of customer investments. These opportunities include services that help ensure the security and reliability of the power system, and innovative business models that offer new value for customers.
However, the speed and scale of the uptake of DER is presenting serious risks to the power system.
If not properly managed, high levels of DER, most notably rooftop solar PV, will impact customers by eroding the security and reliability of the electricity system, leading to higher costs and an emerging divide between those that can afford to install DER and those that cannot.
The continued uptake of rooftop solar PV will see daytime demand fall to levels at which there is
significant risk that the stability of the SWIS will be compromised – this is forecast to occur around 2022. In response, AEMO will be required to intervene more frequently and to a greater extent to maintain system security, increasing costs for customers.
DERs are also contributing to technical issues at the distribution network level. The existing network was not designed to handle large amounts of generation from rooftop solar PV, which is now flowing two ways and causing problems for network operation as the physical limits of infrastructure are reached.
Without improving DER integration in the network, resolution will require costly infrastructure investment by Western Power, or imposition of limits on the size and number of rooftop solar PV systems customers can install on the network. Neither outcome is good for customers.
If DERs are to become a central component of the power system, they need to be fully integrated into the operation of the power system and actively provide support, in a manner similar to larger generators.
As well as low demand in the middle of the day causing system security issues, the system load profile also features high peak demand and associated costs to service that peak.
Existing flat electricity tariff structures are increasingly unsuitable because they do not reflect the true cost of electricity supply, particularly as more DERs are installed. There are minimal incentives under these existing tariff structures for customers to use their energy in a way that helps keep supply costs at a minimum and ensures the system is stable and secure.
Furthermore, customers who install DERs contribute less than their share of system costs, and are disproportionately benefiting from lower bills. This means customers who are unable to access DER are cross-subsidising those who can. In short, the current tariff structures are incompatible with a high-DER energy system.
A vision for the future
The Energy Transformation Taskforce has a vision to solve these problems now and set the system up for a high-DER future. Addressing these challenges through integration and orchestration of DER involves measures to manage the risks and realise new opportunities across the entire electricity supply chain.
The Taskforce’s vision for DERs by 2025 is a future where DERs are integral to a safe, reliable and efficient electricity system, and where the full capabilities of DERs can provide benefits and value to all customers.
There are three parts to this vision:
- A safe and reliable electricity system where customers can continue to connect DERs, and where DERs support the system in an efficient way
- DER capability can offer value throughout the electricity supply chain
- DER benefits are flowing to all customers, both with and without DER
The DER Roadmap is the set of actions, action owners and timeframes required to realise this vision. The Roadmap outlines the way to achieving key milestones on the journey, and will:
Address the imminent danger of system stability issues occurring as soon as 2022
Upgrades to DER functions and settings (like those for inverters) will see DERs automatically help mitigate network and system disturbances, rather than exacerbate them.
Grid support measures by Western Power will assist in maintaining system security and reliability, particularly in the short term. Improved visibility of DERs for Western Power and AEMO will further support this.
Distribution battery storage deployment, provided by a range of parties, will provide a cost-effective way to manage network and system issues caused by DER, and offer customers new opportunities to access storage.
Pilot tariff structures that support a high-DER future
Current electricity tariffs are contributing to inefficient and inequitable outcomes for customers, and the power system. A high-DER future is not sustainable under current tariff structures.
It is important to pilot potential new tariff structures that are more sustainable, reflecting the underlying cost of energy services and incentivising efficient use of the system. That is, pilots for tariff structures that incorporate time-based price signals with low rates during the day when there is excess rooftop solar generation, while signalling for peak demand and the associated costs to support the peak.
This will provide insights into how customers respond to alternative tariff structures, including how they use and invest in DER (e.g. battery storage) under those tariffs.
Ensure customers are protected and are provided with clear and simple information
Customers can continue to install DERs, and access information that helps them make choices about how they use electricity and better manage their costs.
The protection of customers, including data protections, will be maintained even as changing business models provide new electricity services and customer offerings.
Build a future where DER is an active participant in the power system
The Roadmap sets out the requirements for the integration of DERs into electricity markets, so that customers may eventually provide services that support the system and are rewarded for doing so. This will lead to the natural evolution of Western Power and AEMO’s roles and the introduction of innovative ‘DER aggregators’ to the system.
The coordination of many individual customer DERs by aggregators will allow customers to participate in the provision of services that benefit the power system, but in a simple way. The development of mechanisms that allow DER to provide these services and receive payment will open up new value streams for customers, and lower system costs.
Charting the path to success
Below are the priority actions outlined in the Roadmap, which will coordinate and enable the efficient integration of DER into Western Australia’s power system.
Western Power PowerBank installations commence, providing opportunities for network and customer benefit whilst adding to power system stability.
Distribution network visibility
Distribution network visibility program commences to enhance the understanding of distribution network power flows and constraints.
Inverter settings and functionality
SWIS-specific autonomous inverter settings that provide better performance during disturbance events are enabled.
Customer engagement program commences on challenges and opportunities of the high-DER future.
DER orchestration pilot
A comprehensive VPP technology and market participation pilot has commenced, testing the incorporation of aggregated DERs into the Wholesale Electricity Market (WEM).
Pilots for alternative tariff structures have commenced, demonstrating value to consumers who can move electricity use to the middle of the day.
Investment in grid support technologies (including reactors, storage and voltage control equipment) by Western Power is contributing to maintaining system stability on low demand days.
Distribution System Operator (DSO)/Distribution Market Operator (DMO)
DSO/DMO roles, functions, practical operations, regulatory requirements, as well as costs and benefits have been identified.
Western Power has identified emerging network needs and has access to network storage services from the market.
Learnings from tariff pilots are guiding the transition to new pricing, driving system-efficient behaviours and investment in storage that have the potential to lower energy bills.
The System Operator’s dynamic system modelling adequately incorporates DER and arrangements adequately address power flows during system events.
Changes to wholesale market arrangements necessary to enable the participation of DER in the WEM via a DER aggregator are introduced.
Customer engagement program continues.
Network investment process
An amended Access Code is providing increased opportunities for DER innovators to provide services to Western Power and receive revenue for doing so.
Inverter settings and functionality
Communications-linked inverter standards are enabled, providing for DER orchestration and the capability to participate in multiple markets.
DER orchestration pilot
A comprehensive VPP technology and market participation pilot has tested the incorporation of aggregated DERs into the WEM (including market dispatch and settlement arrangements).
DSO and DMO go live in the SWIS, with DERs able to respond to meet network needs as well as be dispatched into the WEM, and be compensated appropriately.
Distribution storage continues to be deployed under a variety of business models, and can access value across the supply chain.
- DER Roadmap complete
- DER is being leveraged for value across the supply chain, including to secure the network and providing value to customers
- Innovative business models with appropriate licensing are providing value to customers and the system as a whole
- The DSO and DMO are coordinating effectively to ensure customers can continue to connect their DER into the future