AGL’s Vesey sees virtual power plants “all along the grid”

AGL Energy’s plans to roll out “virtual power plants” around Australia will extend beyond clusters of homes and small businesses to institutional buildings and the manufacturing industry, the utility’s chief Andy Vesey has revealed.

Speaking at the Disruption and the Energy Industry conference cohosted by RenewEconomy in Sydney on Tuesday, Vesey said centrally controlled networks of rooftop solar and battery storage, such as AGL is set to trial in South Australia, would be a key ingredient of the energy system of the future – a system that would be centred around the consumer.

The South Australian project, announced by AGL at the beginning of the month, will comprise a centrally controlled network of 1,000 residential and business battery storage systems with a combined total of 5MW capacity that will both store rooftop solar power and help manage grid stability in the state.

But Vesey said the utility was now actively seeking more locations well suited to the development of virtual power plants, as well as expressions of interest from consumers – and not necessarily AGL customers – interested in participating in them.

“Anybody who’s potentially interested in participating in the future virtual power plant you can go to (AGL’s website) and register your information; say you’re interested.

“Why? Because as we build these things out we need to know where people who want to participate are, because where you put these plants are going to be important.”

For companies like AGL, the importance of VPPs lies mostly in their ability to “orchestrate all those batteries and rooftops” to the benefit of distribution business to defer capital investment. But as Vesey points out, there a multiple benefits for multiple parties.

“We can also orchestrate the delivery of that energy into the market to avoid the volatility that occurs. We can also, for the benefit of wholesalers like me have another risk management tool, because I now have a 5MW distributed peaking plant.

“And the consumer never knows the difference. They’ll always have the value of their solar rooftop, they’ll always have continuous energy, they won’t know whether they’re pulling on their batteries, whether their charging, or selling energy to the market… they’ll be absolutely blissfully not concerned because of the quality of the service and value that they will receive from it.”

Vesey said that South Australia had been chosen for the first demonstration of the technology for its unique position – not just in Australia but globally – of high renewables penetration, a rapidly shifting generation profile and volatile power prices.

“This will be the largest VPP in the world,” Vesey said. “Why? because the innovation will happen in this market first. Why? Because you have two of the key ingredients for innovation: you have very competitive energy markets and high energy prices.

“You don’t have that same combination anywhere in the world. So where should innovation occur? It will happen in this market first.”

And he said AGL had plans to extend the VPP model beyond the South Australian example to other, larger-scale applications.

“We would love to be able to – and we probably will, watch this space – do it in institutional buildings… as well, because they’re different. And we’re looking to do this on a manufacturing scale. We want to make sure we have the ability to deploy these all along the grid, where they have value.”

Vesey said that the power in the value chain in the electric industry had shifted to the consumer, and the sooner the incumbent industry “got this” the better off it would be.

“People say it’s innovative, but we know we had to do it,” he told the conference. “It starts and ends with the consumer, and the consumer will in time be the one that controls the entire system based on the decisions and consumption they mark on a daily basis.”