The city of Adelaide is rapidly becoming the global centre of virtual power plants, with the Australian Renewable Energy Agency announcing plans to support a rollout of an 8MW project by the retailer Simply Energy.
The proposal to link 1200 Adelaide households with 6MW of storage and another 2MW of demand response capacity in local businesses represents the fourth VPP to be announced or rolled out in that city in the last two years.
And it represents yet another coup for Tesla, whose Powerwall 2 battery storage units will be used by Simply Energy. It follows the decision by AGL to switch to Tesla Powerwall 2 and LG Chem batteries for its 5MW VPP, and Tesla’s own plans for a 250MW VPP that is dubbed the world’s biggest.
The future of that project is unclear since the change of government in the March 17 poll, with the new Liberals premier Steve Marshall saying the initial rollout of 5kW of solar and the 13.5kWh Powerwall 2 units to 1100 low income homes will be delivered, but leaving doubt over the bigger plan to extend it to another 49,000 homes.
The Simply Energy project is the second VPP in Adelaide to be supported by ARENA. It will provide $7.7 million of funding for the $23 million Simply Energy rollout, which is expected to be completed by the end of 2019, and also gave $5 million to AGL for its $20 million project.
The project will also test Greensync’s distributed energy exchange or “deX” platform at a commercial scale. The deX platform allows for energy capacity to be transacted between businesses, households, communities and utilities in response to price signals from the network owner.
“We think consumer energy resources have a huge role to play in Australia’s energy future, but we are still figuring out how we can orchestrate rooftop solar and home batteries to feed back into the grid. This is technically hard to do, which is why these pilot projects are so important,” ARENA CEO Ivor Frischknecht said in a statement.
“This is a potential model for how distributed energy resources can be operated at large scale in the future to help reduce energy prices.”
ARENA describes a virtual power plant as a centrally-managed network of battery systems installed behind-the-meter that can be collectively controlled to deliver benefits to households, energy retailers and the local network.
Simply Energy says Adelaide households participating in the trial will receive the home battery system at a subsidised price – believed to be around 40 per cent discount on the normal price of around $10,000, and with likely bill savings of 20 per cent.
“We will work closely with South Australian Power Networks to give both networks and the market operator greater visibility of behind-the-meter batteries and the ability to use batteries to manage demand and manage network constraints, reducing network costs,” CEO Carly Wishart said in a statement.
“It’s a win-win because our customers are getting better value from their renewable energy solution and the network will have more electricity sources from which to draw, which in turn improves reliability, particularly at times of peak demand.”
SAPN has already conducted a smaller trial of a VPP in Adelaide’s northern suburbs. Other virtual power plants are being proposed by Powershop and Reposit, and various other “demand response” initiatives.
The new South Australia government has also proposed subsidising the installation of battery storage in 40,000 Adelaide homes, although there is no indication that these will be connected or act as a virtual power plant.
It is also not clear whether this project will take precedence over the big Tesla VPP or be rolled out concurrently.
The move was welcomed by Federal energy minister Josh Frydenberg, whose formal opening of the AGL VPP last year famously ended up in a war of words with then SA premier Jay Weatherill.
That stoush was prompted by an embarrassing “load shedding” event a month earlier, when 90,000 homes went without power for 30 minutes after a period of monumental stuff-ups by the market operator and SAPN, the local grid owner, and when Simply Energy and its shareholder Engie left its Pelican Point gas plant idle.
That decision prompted the then Labor government to invest in its own power plan, culminating in numerous investments in small and large-scale storage, including the Tesla big battery, a contract for the Port Augusta solar tower, and other battery and pumped hydro and mini-grid and hydrogen storage projects.
Frydenberg says the new VPP will reduce power prices and improve reliability.
“The Simply Energy project benefits both individual Adelaide households and the broader South Australian community,” Frydenberg said in a statement.
“Households can use more energy generated from their own rooftop solar systems to lower their power bills and the community reaps the benefits of a more stable grid.”
He noted that consumers are increasingly taking up renewable energy, battery storage and more energy-efficient technologies in order to manage their household energy bills.
“This uptake is driving change in the electricity market and leading to a more distributed grid,” he said. “That’s why the Turnbull Government is focused on improving the reliability of South Australia’s energy system through storage.
Consultants Marchment Hill and Flex are also involved in the Simply Energy consortium developing and managing the project.
Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.