What is THE DISTRIBUTED ENERGY RESOURCES REVOLUTION in Australia?

This report represents the collective vision of the Distributed Energy Leadership Forum (DELF),

which is the Clean Energy Council’s key advisory committee for strategy and priorities in support

of distributed energy. The CEC thanks Marchment Hill Consulting (MHC) for drafting and

refining the document and the following members of the DELF for shaping it according to its

vision: Neil Gibbs (MHC and DELF chair), Simon de Bell (ABB Australia), Emma Fagan (Tesla),

Jenny Paradiso (SunTrix), Warwick Johnston (SunWiz), Scott Partlin (SMA-Australia), Mark

Paterson (Strategen) and Dr Penelope Crossley (University of Sydney).

INTRODUCTION

Most of Australia is about to reach ‘socket parity’ according to the Australian Energy Market

Commission (AEMC) and Bloomberg New Energy Finance. This means that in future, more

households and businesses will realise that a grid-connected rooftop solar and battery system

produces electricity more cheaply than what they can buy from the grid.

Millions of Australians have already reduced their electricity bills and lessened their dependence

on the grid using clean, renewable solar power. We have embraced rooftop solar so

enthusiastically that we have the highest penetration of residential rooftop solar in the world. In

Queensland, about 33 per cent of all dwellings have solar installed on their roof1 . South Australia

(32 per cent) and Western Australia (28 per cent) are not far behind. There are now more than

2.1 million Australian solar homes2 . By 2050, the AEMC expects more than half of all houses will

have solar PV systems and about a third of residential buildings will have energy storage.

It will be challenging to integrate that much solar generation onto the grid. Electricity distribution

networks were not originally designed for it.

We need to change the way we manage solar and battery systems and how they interact with

the grid. We’ll need new rules to mandate technological capability and new markets to make

best use of the capabilities already at our disposal.

The next generation of solar and battery systems will be intelligent, with advanced

communications capability, cybersecurity and an interface to markets. This will massively

increase the solar hosting capacity of networks.

Policy makers need to establish markets for the grid services that will be required by future

energy networks. They include markets for grid support, incentives to avoid unnecessary

investment and support for dynamically balancing supply from millions of variable energy

systems.

Progress will require a naturally sustaining support base to avoid being derailed as inevitable

challenges emerge. It will need the characteristics of a democratised ‘movement’. It is our hope

that this document will contribute to building a movement to revolutionise the way we transform

and use energy.

This is a societal challenge. The changes will take place over decades. Households, businesses

and governments will need to work together to make this a success. No single entity can make

this change happen.

RECOMMENDATIONS

In order to facilitate and unlock the enormous potential for distributed energy resources (DER),

the Clean Energy Council (CEC) proposes the following recommendations:

Distribution network service providers

• Distribution network service providers (DNSPs) should require inverters to have Volt

Watt and Volt-var response capability as a condition of grid connection for new DER

systems.

• DNSPs that have already adopted static zero-export limitations should invest in

network intelligence and move toward dynamic export limitations so that they can

utilise DER on their networks more effectively.

• The CEC supports the development of multi-sided trading platforms as a means of

enhancing system optimisation and customer benefits of DER uptake.

• DSNPs should move toward more cost-reflective network tariffs, which could include

time-of-use or demand-based charging.

• Connection agreements should allow for the dynamic engagement of DER in the

power system, and energy customers should have a right to initiate a review of their

connection agreement and the opportunity to receive a better deal.

Standards

• Volt-Watt and Volt-var response should be a mandatory requirement in the Australian

standard for inverters (AS 4777.2).

• Common standards, protocols and application programming interfaces (APIs) for

communication with and between DER are being developed and should be supported and adopted.

Australian Energy Regulator

• The Australian Energy Regulator should recognise the customer value and the

important role of dynamic network intelligence for managing high levels of DER on the

grid and should approve expenditure required by networks to enable this.

State and territory governments

• Government rebate programs for batteries should include virtual power plant (VPP)

capability requirements in their eligibility criteria.

• State and territory licensing and other regulatory frameworks should be developed and

strengthened to ensure that microgrids can proceed with protections for customers in

place and barriers to community energy projects are removed.

• State and territory governments should review their planning and development

approvals systems to remove any barriers to developers of new suburbs aiming for

very high DER penetration and minimal grid impacts using grid-connected microgrids

and embedded networks.