What is a VPP?

Many of you would have seen the acronym VPP floating around the energy industry, in AEMO documents and publications like the Integrated System Plan (ISP). So, what is a VPP? A Virtual Power Plant (VPP) is basically an aggregation of resources. These can be generation, storage and controllable load from decentralised sources.  All being coordinated to deliver services to the power grid including electricity, FCAS and other power system services.

Last week battery manufacturer Sonnen reached the magic threshold of 1MW to operate in the National Electricity Market (NEM) and plans to operate a VPP.

The German based company, Sonnen, now owned by Shell, has built a network of customers to allow their Sonnen branded home batteries to participate in the company’s new virtual power plant.  This has been designed to provide frequency control services. The customers will receive a financial benefit through cash payments. Sonnen’s new program will also provide grid stability services.

The VPP branded, sonnenConnect is Sonnen’s first VPP worldwide.

Each Sonnen battery will not be heavily relied on due to the nature of the VPP aggregating all outputs. To operate in the FCAS market, each household will only be required to supply 4kWh of energy to provide the essential grid stability services.

To be eligible to participate in Sonnen’s VPP and rewards program, households will need to have one of Sonnen’s batteries installed, with at least 4kWh of capacity. No additional equipment will be required to allow batteries to participate in the program as Sonnen batteries incorporate the necessary control systems.

Sonnen has chosen Australia to launch its VPP products as Australia is more open to the establishment of VPPs, along with the high uptake of battery storage system installations compared to other parts of the world.

“With the growing uptake of rooftop solar and home batteries globally, utilities are recognising the importance of home batteries in Frequency Control Ancillary Services (FCAS) or what is known as demand response, to stabilise the grid when there is a surge in the demand for electricity”, Nathan Dunn, Sonnen Australia CEO said.

He also said “through sonnenConnect, we are rewarding customers who are providing us access to their Sonnen Battery when needed for demand response. Not only will they enjoy being energy independent, Sonnen Battery owners are working together as a community to stabilise the energy grid that connects millions of homeowners in the National Electricity Market.”

Sonnen has established a manufacturing facility at the former Holden factory in Adelaide. This allows Sonnen to be branded Australian made. They plan to use the Australian facility to produce other components and software for the energy industry including electric vehicle charging units.

Engie Expands in Australia

The influx of multinational’s into the Australian renewable energy industry is increasing with historic oil and gas producers such as Shell, BP and Total entering the market.

These global energy giants are making large acquisitions to expand their local presence in the clean energy sector. In a world where developers are struggling to bank projects the strong balance sheets of these companies is a welcome addition to the industry.

Engie is the most recent multinational company to expand in Australia with the purchase of development rights to the $750 million Hills of Gold wind project in northern New South Wales.

This project is the foundation development in the newly created Renewable Energy Zones (REZ) in New South Wales’s New England region. This REZ is the first REZ to be created under Australian Energy Market Operator’s (AEMO) vision.

The acquisition of the Hills of Gold Wind Farm will add 420MW into the region. The project was previously developed by Wind Energy Partners.

Engie is one of the world’s largest electricity utilities, with the French multinational operating more than 115GW of generation capacity globally, including a 19GW portfolio of renewable energy projects.

The project will consist of 70 6MW wind turbines and will be connected to the transmission network between Liddell and Tamworth.

Engie has previously owned power assets in Australia, being the operator of the brown-coal Hazelwood power station in Victoria that was closed in 2017. They have ambitious targets for Australia, hoping to develop 2,000MW of Solar and wind projects.

Engie has recently set up the Australian Renewable Energy Trust with Infrastructure Capital Group and Mitsui as a renewable investment vehicle. The trust contains Engie’s 119MW Willogoleche wind farm and it is likely the Hills of Gold project will be added to it.

Electric Vehicle’s to Power the World

Greenpeace have published a report outlining that batteries from Electric Vehicles (EVs) could meet the worlds energy storage requirements. The report highlights the problems emerging from decommissioned lithium-ion batteries out of EVs.

The report also examines the impact of the growing EV sales across the world will have on the supply chain Ore that is mined to produce the minerals to then produce lithium-ion batteries.

There are critical supply chain risks for primarily the lithium and cobalt required for the batteries. Countries like China, South Korea and Japan manufacture 85% of the worlds EV batteries however do not have the large quantities of raw materials available locally.

It is forecast that over the next 10 years the global Lithium battery market will expand at such a rate that 30% of the worlds Cobalt reserves will be exhausted. During the same time 10.35 million tonne of lithium, cobalt, nickel, and manganese will be mined.

EV batteries are replaced once their usable capacity drops below 80%, this normally occurs within 5-8 years from manufacture. Although not useful in EVs, the batteries can be repurposed to meet other needs.

The report finds that repurposed EV batteries could cover all global demand for energy storage in 2030, calculated to be around 368GWh of capacity.

Decommissioned EV batteries could be repurposed and used as backup power systems in telecommunication infrastructure and data centres. They can also be used for energy storage devices across the National Electricity Market (NEM) and remote area power supplies.

 

Written by: Alex Driscoll, Senior Manager, Markets & Trading

AEMO Leads Global Push to Slash Emissions

As seen in recent reports published by Australian Energy Market Operator (AEMO), which include the Electricity Statement of Opportunities (ESOO) and the Integrated System Plan (ISP), the outstanding trend is the rapid growth of renewables and the need to connect the generation and load in a more robust manner.

As coal is retired the replacement technologies are now Solar and Wind.  This is resulting in issues such as, inertia and system strength. The network needs to be redesigned to cope with limitations, due to the lack of inertia provided by non-synchronous generation such as Solar and Wind.

AEMO, in conjunction with various Transmission Network Service Providers (TNSP) is leading the world in solving the issues associated with greater intermittent renewable generation on the network.

AEMO have launched the Global Power System Consortium (G-PST), a consortium of the six largest system operators grappling with high volumes of renewable generation and growth. The group includes:

  • Australian Energy Market Operator (AEMO)
  • The National Grid Electricity System Operator UK
  • California Independent System Operator (CAISO)
  • The Electric Reliability Council of Texas (ERCOT)
  • Ireland’s System Operator (EirGrid)
  • Denmark’s System Operator (Energinet)

The charter for the group is to achieve a 50 per cent cut in emissions by unlocking $10 trillion worth of investment in wind, solar and enabling technologies over the next 10 years.

Along with the lead members, 25 other system operators from around the world will participate in the G-PST. Several large research institutions will take part in the technical work, including:

  • Commonwealth Scientific Industrial Research Organisation (CSIRO)
  • The Fraunhofer Cluster of Excellence for Integrated Energy Systems
  • National Renewable Energy Laboratory (NREL)
  • Latin American Energy Organization (OLADE)
  • Institute of Electrical and Electronics Engineers (IEEE)
  • Electric Power Research Institute (EPRI)
  • The Danish Technical University (DTU)
  • ASEAN Center for Energy (ACE)

During the announcement at London’s Bloomberg New Energy Finance Summit, AEMO Chief Executive Officer, Ms Audrey Zibelman announced that, “Countries around the world are looking to pursue a path to modern low-emissions energy systems, but face significant challenges in acquiring and applying the technical knowledge needed to operate and plan rapidly transforming power systems”.

She went on to say that “The goal of G-PST is bold: to contribute to more than 50% emissions reductions of all pollutants around the world, over the next ten years, by acting as an enabler of new clean energy integration.”

GreenPower Rebranding

 

 

GreenPower, Australia’s accreditation program for renewable electricity is rebranding, to create renewed interest from businesses looking to cut their emissions. The GreenPower brand was launched in 1997 at the start of the renewable energy push towards electricity customers. At the time, most major electricity retailers offered some form of GreenPower as an extra to their electricity products.

The GreenPower program is voluntary for households and businesses to purchase renewable electricity through their retailer. It is a government backed program for verifying that purchases are from Australia’s wind and solar resources and aim to cut emissions. The GreenPower program sits on top of the mandated Renewable Energy Target so customers are voluntarily purchasing above what is legally required and therefore are supporting the increased growth of the Australian renewable energy sector.

To date 110,000 households and 17,500 businesses purchased renewable electricity through the GreenPower program, this comes from 500 accredited projects.

With the reduction in the cost of LGCs, the GreenPower program is encouraging households and businesses to consider participating in the voluntary program. As technologies improve, the cost of production of renewable energy has reduced since its inception in 1997, as a result renewable energy has become cheaper and this has flowed into the GreenPower product.

With the changing housing situation in Australia, many end users now rent and do not have access to roof top PV. The GreenPower program is a way for residential energy users without the ability to install rooftop solar to purchase renewable energy.

There are many benefits to going green with GreenPower. Your purchase supports Australian renewables, reduces your emissions, and contributes to a healthy future.

If you are wanting to protect the environment and support renewables, choosing GreenPower is a powerful way to show that your business is environmentally conscious and supports Australia’s renewable energy sector.

Our utilities retailers offer a range of green generation alternatives to help you meet your sustainability goals, including renewables, onsite solar generation, and energy efficient solutions.

Let Edge Utilities help you procure the best GreenPower deal for you.

Summer Reliability Looking Good

 

On Thursday 27 August 2020, AEMO published its latest Electricity Statement of Opportunities (ESOO), this is a projection of electricity supply reliability in the National Electricity Market (NEM) for the next 10 years.

The ESOO is key in identifying gaps in reliability which could lead to the calling of the Retailer Reliability Obligation (RRO) in the coming 5 years. As the ESOO covers the next 10 years, the second 5 years following the RRO looks closer at forecasts for the major transmission upgrades and the continued development of renewable generation.

This years ESOO has looked at the impact of COVID-19 and how this could impact the outlooks uncertainty. As a result of COVID-19 and the change in generation mix, demand changes and the gas market, it has resulted in AEMO not forecasting any unserved energy (USE) for the coming summer.

This years’ ESOO will require an update if the impact of COVID-19 is rapidly reversed due to a faster return to normal than expected. There are a few points of concern in AEMO’s statement including the delays or deferment of planned outages that could affect reliability over summer. ElectraNet have also reduced the summer rating on the Victoria to South Australia Interconnector in both directions following damage incurred during the bushfires of 2020.

A further downside of the reduced flow across the interconnectors is the further delays of the commissioning of renewable projects across the regions resulting in AEMO needing to deploy Reliability and Emergency Reserve Trader (RERT) to manage the expected unserved energy. The focus following this summer will be the outlook for reliability in New South Wales when Liddell Power Station retires.

The outlook has improved since the 2019 ESOO with the augmentation of the Queensland to New South Wales Interconnector (QNI) in 2022 to 2023 and increase renewable generation development in the region.

Another interesting observation is that by 2025, the minimum operational demand will occur during the middle of the day not the historic period overnight. As previously discussed, this will lead to the challenges of managing voltage, system strength and inertia.

AEMO is working with aggregators of Distributed Energy Resources (DER) to offer services such as increased PV controllability, load flexibility, storage, and load shifting.

Another urgent action for new projects is the requirement to ensure all new distributed PV installations have suitable disturbance ride-through capabilities and emergency PV shedding capabilities.

AEMO is also working with various stakeholder and industry experts to ensure energy supply is protected from the effects of increasing frequency, extremity and scale of climate induced weather events observed in recent years.

The NEM continues to see the connection of a large quantity of renewable generation with 4,300MW of new capacity forecast to be operational this summer, 1,900MW of this is expected in Victoria.

Due to impacts of COVID-19 and increased renewable generation penetration the reliability of thermal generators could remain at the historic lows observed during 2019-2020 or deteriorate further resulting in volatility.

Changes to your Energy Bill

Changes to your Energy Bill

The effects of COVID-19 have impacted the retail energy space heavily in the last 12 months. This has caused underlying costs of electricity production to decrease significantly. It is expected that costs will remain low for the next 6 to 12 months.

As the Australian economy begins to rebuild itself in the next 6 to 12 months, it is expected that costs will remain low. Following the impact of COVID-19, came price changes with the introduction of the Default Market Offer (DMO) and Victorian Default Offer (VDO).

The DMO outlines the annual maximum total bill amount that an energy company can charge to eligible residential and small business customers in New South Wales, South Australia, and South East Queensland. Energy retailers use the DMO as a reference price, to guide how they structure their charges. However, retailers can set their own supply and usage charges provided they are equal to or less than the DMO price. The VDO is like the DMO, however is applicable to eligible Victorian customers only.

High electricity offers have now reduced significantly. This reduction means end users who choose to switch offers will still save money but not as much as prior years. The difference between the highest standing offer and lowest market offer has decreased by 10%. Although there has been a decrease in the overall offer price, Victoria has actually seen a 10% increase. The average market offer price is still considered to be quite high at 56%. It is unclear whether these changes are because of the DMO and VDO changes, or by increased market competition.

Market Competition

The increased market competition appears to be pushing retail energy prices down after the introduction of 40 new retail brands. In the last 12 months alone, 35 new companies have entered the market. There have also been 8 existing brands who have expanded into other states jurisdictions and are now offering new products. Net retailer margins across the National Electricity Market (NEM) have also dropped due to increased competition. This has seen on average, a decrease of $93 to $66 per customer in the last 2 years.

Products deemed to be essential services such as electricity and gas, have also continued to evolve. To appeal more to customers, retailers are strategically using add-on products as a way of selling the underlying product. Most retailers are doing this by bundling electricity and gas with internet and phone services.

As we can see, there has been a large amount of changes to the market and to customers costs. However, an Energy Consumers Australia (ECA) survey has shown that end users are happier. The results of the survey showed that 57% of customers believed there was value for money at today’s price. Switching rates are a leading indicator of customer dissatisfaction, and recently these have lowered.

 

Written by: Alex Driscoll

 

To learn about what else is changing in the market, read our latest article: https://edgeutilities.com.au/2020-isp/

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