Australia’s energy future on grid edge – can AEMO give it a push?

The Australian Energy Market Operator has again stressed the vital role that demand management solutions – and not more baseload coal – will play in the safe, stable and economic running of Australia’s electricity grid, as it transitions away from centralised fossil fuel generation and towards distributed renewables.

Speaking at an industry event in Melbourne on Thursday night, AEMO CEO Audrey Zibelman said that the key role of the market operator was to drive productivity of the system – “and the best way to drive productivity of the system was being able to get demand to participate.”

This “demand” Zibelman refers to is the multiple gigawatts – 6GW in small-scale renewables, alone – of energy generation capacity that has been installed by homes and businesses around the country, but that is currently “not visible” to the market operator, and therefore of little use in balancing the grid.

Zibelman wants to change that, and firmly believes that by using non-network solutions to help manage this behind-the-meter capacity, Australia’s grid can make an ‘orderly transition’ to renewables and deliver secure, reliable and affordable energy.

“We’re going to have more and more renewable variable resources come into the system,” Zibelman said, in a keynote address at the launch of GreenSync’s Decentralised Energy Exchange, deX.

This is a platform that – to the AEMO chief’s “delight” – aims to harness Australia’s vast distributed energy resource and open it for trading between businesses and households and communities and utilities.

“AEMO is looking, today, at 20,000MW of connection requests into the NEM, all of it renewables. It’s amazing,” said Zibelman.

“So the question for us, as we consider supply and demand balance, is how do we do it in the most efficient way? And one of the most efficient ways to do it is to make sure we can use the tools that are sitting at the grid edge, as well as we can use the tools on the system.”

AEMO’s June electricity forecast report was dominated by the impact and opportunities of rooftop solar, battery storage and associated technologies and demand controls.

Next week, AEMO is expected to release the latest of its long term opportunities statement, which is also expected to focus on demand-side technologies, and as it looks to guarantee security of supply ahead of the coming Australian summer, while also juggling the political hot potato that is Australia’s inflated electricity prices.

This too, is expected to be the general flavour of any advice Zibelman will give to the federal government in a key document also due next week on Australia’s needs for “baseload” or “dispatchable” generation.

The Coalition’s reluctance to let go of the increasingly outdated concept of cheap baseload energy, preferably fossil fuelled, has frustrated many in the industry, and appears to be behind the PM’s reluctance to categorically rule out government backing for new coal generation on the NEM.

Meanwhile, companies like GreenSync are rolling out the very solutions AEMO has been pushing for – and are doing so with the full support of major industry heavyweights including AGL Energy, Energy Queensland, SA Power Networks, AusNet and EnergyAustralia.

Perhaps most importantly, they are making the market operator’s job easier, both in its efforts to harness the power of demand response, and to bring the federal government over to the right side of the low-carbon energy transition.

“Having an announcement like deX in the market allows market operators like AEMO to make assertions that there are ways to get flexibility into our systems that don’t require spinning, synchronous machines,” GreenSync CEO Phil Blythe said at the launch on Thursday.

“We’re engaging to bring the industry along with us. The power is there for anyone to join these markets. Anyone who wants to get fair value for their assets.”

For Zibelman – who has been on both sides of the fence, having also set up her own demand response company – these sort of solutions tick almost all of the boxes on grid productivity, including energy security, grid stability, while also addressing key economic and environmental concerns.

“I’ve been chasing this concept of demand response probably… since 2005, when I was running the grid operations at PJM (a US network operator with operations across multiple states),” she said at the launch.

“The issue we had there… was that we were seeing prices go up, we were not seeing investment, and there was a whole lot of concern around congestion on the system; and customers were really irate,” Zibelman said.

“So when I look at it now, with Australia, and what we’re trying to do, it’s the same types of issues; we’re trying to drive a very productive system, which means to us that supply and demand need to be balanced out.

“And as we see customer choice changing, and as we see customers wanting to do more around distributed energy resources, what we want to do is use it to create this larger ecosystem, so that we drive productivity in the system and we make sure that as we’re thinking about supplying electricity we’re doing it at the most efficient price,” she said.

“To do that, it’s going to be very difficult for AEMO to have a look at every installation and think about how to use that. So having entities like GreenSync… is going to allow organisations like AEMO to use demand response better. Because you’re helping us solve the problem at the grid edge.

“Australia, by doing what we’re doing… is going to be solving the issues that are going to be taken to Houston, to New York, to Japan, and everywhere else where people are struggling with the same set of dilemmas,” Zibelman said.

For Blythe, who is rolling our four new projects using the company’s deX platform – one of them, announced on Thursday night, is a state-wide operation in partnership with Energy Queensland – the timing is right to show leadership on demand management – particularly with almost 6GW of rooftop solar alone installed on Australian rooftops.

“That’s an amazing change in (energy asset) ownership,” Blythe said on Thursday.

“And the only thing we have in our arsenal to enfranchise millions of participants, is markets.

“We’re engaging to bring the industry along with us. The power is there for anyone to join these markets. anyone who wants to get fair value for their assets,” he said.

“It’s almost inevitable that to plan the future of our grid, we’re going to need to make assumptions about the amount of renewables coming in and where they will fall.

“That’s going to happen with or without policy settings,” Blythe said. “How the government sets those policy levers might change the rate at which things change, but it won’t stop the train.”