The head of Australia’s peak network group has called for regulatory change and more flexibility for homes and their power assets, to help local networks manage the consumer-driven push towards 100 per cent renewables across the country.
Andrew Bills is the chair of Energy Networks Australia, and finds himself at the cutting edge of this transition as CEO of SA Power Networks, where the output of rooftop solar alone exceeds grid demand about every second day of the year.
South Australia is expected – within 18 months – to become the first gigawatt-scale grid in the world to reach 100 per cent “net” renewables (the net refers to the fact that it imports and exports at times and is not an isolated grid), and is already running at a 75 per cent share of wind and solar.
Much of that solar comes from households, with nearly half (48 pct) of all homes supporting a total of 3.2 gigawatts of rooftop solar capacity, which is significant in a grid with average demand less than half of that.
That solar penetration is also world leading, and at a level that stuns network peers in other countries. It is rapidly being followed by a faster uptake of home batteries (double that of the country average), and a growing interest in electric vehicles.
This has required South Australia to be at the forefront of key technologies designed manage this home energy revolution, initially with the blunt and rarely used “solar switch-off”, required by the market operator as a last resort to help maintain grid security.
That has been followed, more successfully, by the rollout of innovative technologies that allow for flexible exports for solar households, and no longer limits the amount of rooftop solar that can be installed.
iis now being augmented with the trial installation of home energy management systems and tariffs that reward homes for cutting imports, as well as exports, at key times.
“We know that the lowest cost source of electricity comes from customer energy resources – CER – like rooftop solar and home batteries,” Bills said in a keynote speech to EN26, the body’s biannual conference, in Adelaide on Thursday.
“We want our customers to treat their energy like their fruit & veg – grow their own if they can, buy local if they can’t. The resources are there, on roofs and in backyards – our job is to make sure that they’re working as hard as they can, and that customers are getting the benefit.”
To achieve that, however, is going to require some clear thinking, not just from SAPN and the other networks that will be following in its footsteps, but also by regulators and policy makers.
Unlike in other countries, Australian electricity networks are separated from retailers and generators, which means that while they provide the physical connection from the grid to the home, they are not supposed to have much to do with the customer, or with technologies that are considered part of the competitive market (such as batteries).
They are seeking to break down some of those barriers, and move out of their “sandpit”, but are facing strong pushback by legacy utilities keen to protect their own turf, and by technology providers fearful of being crowded out of the market.
Some consumer advocates worried about a repeat of the gold plating of the grid that sent power bills soaring more than a decade ago.
But Bills insists it is not about building the regulatory asset base. He argues most of the gap can be filled by aggregators and technologies that provide flexibility.
“We can get higher utilisation of the network without overbuilding it … that’s a better outcome for the customer.” In effect, the networks say they want the regulator to offer more carrot, and less stick.
The networks’ ambition is to become distribution system operators (DSOs), arguing that they are best placed to see opportunities in the grid and work with technology providers, regulators and retailers to offer tariffs that encourage households to embrace the two way flow of electricity, get rewarded for it and enjoy lower costs.
“We think that the most efficient energy market is one dominated by CER and firmed by large scale resources,” Bills says. “So how do we make sure that CER can access the wholesale market and compete on an equal basis?”
Bills sees two steps. The first is to ensure customers can import and export as much as possible from the network, through flexible connections, and for the customer to be rewarded for that flexibility – either dialling down solar output, or reducing loads such as EV charging.
“In practice, this means that we pay customers to respond to network constraints,” Bills says. “This lets us avoid network upgrades, meaning that costs stay low and that customers get rewarded for helping the network.”
It speaks to the principal themes of the EN26 conference, which are about connection, flexibility, and most of all trust, and underlining the benefits of a shared and smart grid that delivers value for money.
This leads to the next step which is to allow networks to act as DSO’s, playing the role of system integrator of CER, and working with retailers and aggregators to form a middle layer between CER and the broader energy market – rather than the top down approach from the market operator and transmission companies that exists now.
Trust is a major theme of this conference, and dominated the first day of talks. Most consumers want control of their assets and have been reluctant to join virtual power plants, but the networks argue that consumers can keep control, and get paid for helping the grid, under their proposal.
SAPN is buoyed by the success of its flexibility scheme. More than 90 per cent of new solar installations opt for flexible exports, and CEO Bills is confident that nearly the 3 GW of legacy solar systems will also transition, particularly as premium feed in tariffs expire in 2028, and as households upgrade their systems.
Some 500 households are also trialling the home energy management technologies, which can automatically reduce load in homes (starting with EVs), and the Energy Masters and Market Active Solar program that it is running in conjunction with retailers Engie and AGL.
“We’re making real progress,” Bills says. “But there are a few things that risk derailing us, things that we really think need addressing. Today’s regulatory framework doesn’t lend itself to this future, and we think that needs a look at.”
The first issue is to ensure CER is regarded as an output of long-term system planning, rather than just an input.
Bills says the ENA wants the AEMC, the market rule maker, to look at the co-optimisation of CER with large-scale resources through the ISP Review this year. It also wants the AEMC to explore new incentives to encourage local networks to maximise the use of their assets.
“Regulation has to change,” Bills said in a separate panel session.
The industry is envious of the UK model, where a forward looking regulator analyses what’s needed to meet government decarbonisation targets, and then asks the networks and aggregators to suggest how they can do that at least cost. Bills says it is saving hundreds of millions in savings, and consumers get a share of that.
“We’re deep in design for this phase right now, spinning up a marketplace where participants can bid for response to network constraints right across ournetwork,” Bills says. “We’re leveraging the models already in place in the UK and building upon them to suit our world-leading levels of CER.”
See also: Regulators will have to be nimble to deal with home battery boom and bigger solar systems, says Kean
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Giles Parkinson
Giles Parkinson is founder and editor-in-chief of Renew Economy, and founder and editor of its EV-focused sister site The Driven. He is the co-host of the weekly Energy Insiders Podcast. Giles has been a journalist for more than 40 years and is a former deputy editor of the Australian Financial Review. You can find him on LinkedIn and on Twitter.
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