Postcard from the Future: VPPs in Australia

Australian consumers boast one of the highest per-capita consumption rates of electricity in the world (even greater than the US). These consumption levels translate into flexible load resources ideal for aggregation and optimization into virtual power plants (VPPs). 

What is a VPP? Think of it as a conglomeration of many distributed energy resources (DER)—loads, but also generation, batteries, and EVs—that can be combined into a pool with a sum of parts’ value far larger than these DER assets offer individually. With sophisticated artificial intelligence software, these resources scattered across the grid can be combined virtually to provide the same services as a traditional 24/7 power plant—but at much lower environmental cost. 

Blackouts, skyrocketing retail power prices, and sizable increases in the generation of energy from renewable sources have created the perfect storm in Australia, requiring new answers to reliability, flexibility, and cost challenges. In Australia, concepts such as prosumer-based VPPs that incorporate residential rooftop solar PV coupled with energy storage have been called into immediate commercial applications.

Problems with Power in Australia

An outage in August 2018 underscored how new technologies that are fundamental to VPPs may be able to help prevent such blackouts in the future. In this case, twin lightning strikes and the sudden corresponding failure of two transmission lines posed a threat that could have again led to widespread outages. While communities in New South Wales and Victoria were blacked out, and big consumers such as aluminum smelters and other industrials were cut off, the blackout never spread thanks to renewable-rich regional grids supported by advanced battery technologies. An extreme heat wave in January 2019 led Australian Energy Market Operator (AEMO) to ask Alcoa Australia, the largest electricity customer in Victoria, to slash power consumption to keep the grid up and running, highlighting the value of demand response and other VPP-related grid services to maintaining grid reliability.

Learning from the Past

The key lesson learned? These blackouts, the effect of rooftop solar PV on network reliability, the decline in coal generation, and rapid uptake in large-scale wind and solar generation all underscored the need for AEMO to have greater visibility into the grid. This evolution in more granular control is now often referred to as distributed energy resource management systems (DERMS). AEMO views VPPs co-optimized through DERMS applications as having the potential to fill an emerging reliability gap in available resources that could affect approximately 66% of Australia’s population. Thanks to new software platforms, grid operators such as AEMO now have tools that can enable increased uptake of renewable energy while maintaining a reliable grid network. 

Another way to look at why Australia might lead global adoption of VPPs and DERMS is comparing it to other individual countries on the basis of decentralization. Australia emerges as the global leader in just a few years, and then maintains a major leadership role beyond 2030 (see figure). 

Decentralized Energy Ratio, Selected Global Country Markets

(Source: AEMO-CSIRO)

The Most Sophisticated VPP for South Australia

AGL Energy Limited is Australia’s largest utility and is moving forward with a VPP to aggregate the rooftop solar PV and battery systems (from Tesla, SolarEdge, and LG Chemical) of 1,000 households in Adelaide, South Australia. The VPP relies on Enbala’s Concerto platform to orchestrate and optimize coordination of these DER to maximize the overall benefits across customer and wholesale markets (capacity and ancillary) as well as network service value streams. While not the largest VPP in terms of capacity or customer number in Australia, it could be considered the most sophisticated due to variety of vendor assets involved and grid services rendered.

For more on VPPs in Australia, reference this new white paper from Guidehouse Insights and Enbala.