FACULTY OF ARTS

Bruny Island Smart Grid Pilot: Beating the Utility Death Spiral with Distributed Storage

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Bruny Island Smart Grid Pilot:

Beating the Utility Death Spiral with Distributed Storage

Bruny Island Battery Trial – CONSORT : CONsumer energy systems providing cost-effective grid suppORT

PhD presentation on 20th Feb 2017 for NCCARF forum, UNSW Sydney.

Veryan Hann, UTAS PhD Candidate, BSc(Hons), PGDip Energy, MPP.

veryan.hann@utas.edu.au

This project receives funding from ARENA as part of ARENA's Research and Development Programme

The Energy Market (utility) Death Spiral

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Image credit: Appalachian Voices

Theory and context

The key points: Ø  Transition

Ø  Innovation

Ø  Policy implementation

Ø  Integration and

Coordination

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Description - the Bruny Island pilot

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Ø  TasNetworks, ANU, and USYD testing technical & economic

feasibility. Reposit Power providing ‘battery smart’ software. UTAS is investigating the consumer-technology interaction.

Ø  Not business-as-usual for a utility to do this pilot – it goes against the traditional product-oriented business model.

Ø  A move to a higher consumer engagement is a service-oriented business model (IDC, 2015, pp.8-9; ENA and CSIRO, 2015, p.1; Richter, 2012; and Helms, 2016)

Ø  An opportunity out of the ‘utility death spiral’ challenge.

The Pilot area is the majority of the island except the northern tip (on a different undersea cable).

Bruny Island Smart Grid Pilot

Multi-partner, multi-disciplinary; and initiated by the utility (TasNetworks)

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Smart Grid Pilot - objectives

Ø  To solve immediate problems for an aging network under pressure. It may represent a utility paradigm shift towards infrastructure ownership and battery interaction with householders. This is a potential new model for utilities.

Why do this pilot? (the utility perspective): Ø  Responding to structural change within the Australian energy market.

Ø  Instead of viewing customers using PV as a business threat- harness opportunity “unlock the customer and network benefits of residential storage” (IRITG, 2015, p.500)

Ø  The rate of change of technology outstrips regulatory change; pilots like this help gain insight into a future system, in order to model policy responses.

Urgent need to re-consider current business models

Global shift - The International Energy Agency finds that implementing smart grids is necessary for the “global community to achieve shared goals” of energy security, climate change mitigation and economic stability. (IEA, 2011)

Shift is occurring due to external pressures which need to be adapted to –

Key findings from a recent international white paper (IDC, 2015):

Current utility business models are under threat - by non-utility players (ICT & Telcos, eg with virtual powerstations) as well as new business models

The traditional model is outdated and opportunities exist -

High fixed charges on bills are not cost reflective of use (John, 2015)

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Ø  Utilities must innovate to meet Climate and Energy Policy pressures; to reduce GHG emissions; to conduct business sustainably into the future.

Ø  ‘adapt or die’ because battery storage costs are predicted to drop rapidly, and ‘Australians are installing rooftop solar at world leading rates” (CSIRO and ENA, p.2)

Ø  The benefits batteries are a fast response - recognised by the AER (Conboy, 2016)

Ø  “there is an opportunity to change to a new business model based on storage. It is a change in attitude" (Cox, 2017)

How to beat the death spiral? – With utility innovation and distributed storage

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Summary of co-benefits for beating the death spiral with utility innovation and distributed Storage

Ø  Utilities operate sustainable business models,

Ø  Positive environmental effects (incl. consumption at site of generation)

Ø  Democratisation of energy (participation, co-ownership of infrastructure, more info/awareness)

Ø  and shifting the peak demand through behaviour change

Ø  Increased renewable energy with increasing system reliability – through small scale renewable and batteries

h"p://brunyba"erytrial.org/  

Acknowledgements  This  project  receives  funding  from  ARENA  as  part  of  

ARENA's  Research  and  Development  Programme;  

and  is  supported  by  an  Australian  Government  RTP  

Scholarship.  

 

References ARENA, 2015. ‘Trialling a new residential solar PV and battery model.’ Ergon Retail and ARENA 2015

Conboy, P. 2016. ‘Submission on National Electricity Amendment – Five Minute Settlement.’ Submission to the AEMC by the Chair of the AER http://www.aer.gov.au/publications/submissions/aemc-rule-change-five-minute-settlement

Cox, J. 2017. Jason Cox, Program Coordinator of the ARENA Moreland Microgrid Investigation, VIC. personal communication and interview on 7 Feb 2017. CSIRO and Energy Networks Australia, 2016. ‘Electricity Network Transformation Roadmap: Key Concepts Report, Summary’. Energy Networks Australia

IDC, 2015. ‘IDC Energy Insights White Paper: Designing the New Utility Business Models’ International Data Corporation, MA, USA

EC, 2009. ‘Bridging the Valley of Death: public support for commercialisation of eco-innovation’ European Commission, Directorate General Environment. Final Report.

ENA and CSIRO, 2015. ‘Electricity network transformation roadmap’ Interim program report.

IEA, 2011. ‘Smart Grids Roadmap to 2050’ Technology Roadmaps: Smart Grids. International Energy Agency, Paris.

Helms, T. 2016. ‘Asset transformation and the challenges to servitize a utility business model’. Energy Policy. April 2016 v91 pp.98-112

Integrating Renewables into the Grid, 2015. ‘Stocktake Database’

John, J, 2015. ‘The future of utility business models, this time without fixed charges’. Greentechmedia

Richter, M. 2012. ‘Utilities’ business models for renewable energy: a review’. Renewable and sustainable energy reviews. 2012 June, v.16, no.5

Sadler, D. 2016. ‘Sydney startup Evergen raises $3.7 million to take “Australian first” smart energy offering to the people.’ published online at StartupSmart

Simshauser, P., & Nelson, T. (2012). The Energy Market Death Spiral -Rethinking Customer Hardship. AGL Applied Economic and Policy Research, (31).

Wood, T, Blowers, D, and Chrisholm, C, 2015. ‘Sundown, sunrise: how Australia can finally get soalr power right.’ Grattan Institute ISBN: 978-1-925015-67-6 12