Presentation Title Presentation Sub-Title
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The NEO-NEM
Electricity sector trends, regulations and
adaptation to distributed energy resources
Craig Chambers
2016 Summer Study on Energy Productivity
2015-17 Embedded
Network Customer
Choice
2016-17 Transmission Connection
and Planning Arrangements
Regulatory Evolution Long term interests of consumers & efficient operation
Time
2012 Power of Choice
2016-?? Network Credit Determination
2011 Avoided TUos and Network
Support Payments for
Embedded Generators
2011 SENEs
2011 Expanded
DMIS
2013 Small
Generator (5-30MW)
Registration Exemption
2014 Customer access to
consumption data
2014 Solar Power
Purchase Agreement exemptions 2015-17
Metering Competition
2014-15 Chapter 5 & 5A amendment for
Embedded Generators
2015-17 Network
pricing cost reflectivity
2015-19 Renewed DMIS/A
2013 Transmission Framework Review
Market Evolution toward a “NEO-NEM” Efficient Operation of National Electricity System
G G IPP EG
T
WHOLESALE COMPETITION
§ Generator Competition§ Retailers have choice§ Market operator
AEMO
D/R
Despatch
Meter Data
Consumers
D/R
Consumers
MONOPOLY
§ No Competition§ No Choice§ Government Ownership
G
T
Pro/Consumers
DER
G IPP EG
T
Power
FULL COMPETITION
§ Independent system operator§ Data competition§ Cost / Revenue Reflectivity
ISO
DR
TPA
R
Data
DAs
TPA
$
$DER
G G IPP EG
T
Power
RETAIL COMPETITION
§ Consumer retailer choice§ Wholesale market operator§ Open network access
AEMO
R RR
Pro/Consumers DER
$
Meter Data
Dis
patc
h
D
LegendG – GeneratorAEMO – Australian Energy Market OperatorISO – Independent System OperatorIPP – Independent Power Producer
EG – Embedded GeneratorT – Transmission ProviderD – Distribution ProviderR – Retailer
DAs – Data AgentsTPA – Third Party AggregatorDER – Distributed Energy Resources
Interrelation required to unlock the market
Intelligent, reliable and economical data management
Continued growth of RE and DER is inevitable
Continued innovation in enabling infrastructure and hardware
DER
Enabling Hardware
Software
Regulations Regulations that enable the DER potential
ICT and Market Challenge
Image Source: Smart Grid Primer
We currently have disparate networks that are crudely interconnected, issues include:
An agent may be capable of providing a service (or set of services) to the system but may lack the information required to do so effectively.
Future network ICT topology
Source: National Institute for Standards and Technology (NIST) Framework and Roadmap for Smart Grid Interoperability Standards
Open Grid
System Reliability & Capacity Mgt
Smart GridEnergy
Trading & Energy Mgt
Energy Services Co.
Independent System
OperatorDespatch
Compliance
Trading
Market Clearing
Distributed Energy Resources
Trading
Billing
Customer Service
Power Quality Regulation
System Operation
Data Agents
Smart Meters
Safety
Aggregation Services
Cyber Security
Scheduling
Forecasting
ICT
Regulations
Policies
Standards
Key Considerations and Challenges Today
• Policy and regulatory framework
• Unclear business case
• Different system operation layers
• Legacy systems integration, information gaps and diverse and numerous data types
• Focus has historically been on automation and protection.
• No standard or common information model
• Lack of harmonisation protocols and standards
• Validation of approaches
• Vendor momentum
Tomorrow
• Who is the data custodian and system operator?
• Development and prioritising an overarching architecture
• Privacy and cyber security
• Financial commitments
• Institutional resistance
• Testing and validation of approaches and codes
• Redefine critical infrastructure protection and reliability requirement
• Ability to perform the dynamic state estimation in real time
Role of Aggregator/Operators Many claim a need for aggregators without clearly delineating how exactly the aggregators are or will create value. The ultimate question is will the model be a DSO, ISO or intermediate levels of aggregation from separate parties.
System Value
Private Value
Current Regulations &
Technology
Advanced Regulations &
Technology
Opportunistic Aggregation • Inadequate regulations • Flaws in system balancing value • Inefficient locational prices and network charges
Transitional Aggregation • Manage complexity and engage stakeholders • Close information gap • Coordinate system planning and operation
Fundamental Aggregation • Economies of scale • Economies of scope through bundling • Risk management, competition and innovation
Source: The Value of Aggregators in Electricity Systems, MIT
Possible Future Market Framework
ISO (AEMO) TNSPs Wholesale Market Dispatch Scheduling & Trading Generation Planning Inter-regional Planning Ancillary Services
Transmission Planning Connections Operations and Maintenance
DSO DER Dispatch Distribution level scheduling
Integrated Planning Trading Platform
DO Distribution Operations
Connections Engineering Analysis
DER DER Operations
End-user Device Analysis
Source: Adapted from Berkley Lab, Distribution Systems In A High Distributed Energy Resources Future, Oct 2015
Adaptation Considerations
• Redefine the NEM to remove the inefficient biases toward greater interoperability
• Data transparency will inform better decisions
• Measure and monetise the locational and diurnal value (+/-) of DER in the system at new nodes.
• Align tariffs to efficient outcomes for both consumer and industry
Craft
a Dist
ribute
d
Energy M
arket
Enable data
transparency
Whole
of S
ystem
Plannin
g
Cure the Tariffs
Disorder
Global Insights
USA - California Being the national leader of installed PV capacity California DER uptake is spurred by renewable targets and they are pursuing mandates to ensure DNSPs better integrate DER onto the grid. See California ISO aggregator plan
USA – New York Fears of repeated power outages caused by natural disasters such as Hurricane Sandy are the drive behind NY states Reforming the Energy Vision (REV) program.
Japan Rising power prices and a consumer focus on self-sufficiency post the Fukushima nuclear disasters has lead to greater uptake of DER and micro-grids.
India Focus is on using DER, renewables and smart technologies to achieve their goal of electricity supply to 100% of the population by 2027.
UK Vodafone has won a £75m contract with Scottish Power Energy Networks to run performance monitoring and fault identification systems for more than 30,000 substations and over110,000 kilometres of lines.
Europe Smart Grid Task Force is focused on: 1. Standards 2. Cyber Security, data
protection and privacy 3. Regulatory Frameworks 4. Infrastructure 5. Project Implementation
Future Scenarios Where to start?
- Define the cost benefit of change
- Redefine the future utility and market frameworks/rules
- Close the ICT gap & strive for greater interoperability
- Craft the distributed energy market and transaction platform by developing standard system operating procedures
- Create standards and/or adopt others such as NIST, IEC, ISO ZigBee, IEEE, HomePlug, OpenADR etc.
Regulated Competition
MicroGrids Prevail
Aggregators/Traders Prevail
Markets Prevail
Open & Transparent
Pricing
Network Adapts to
Market
Market Adapts to Network
Limits
Fragmented Pricing
Concluding takeaways
- NEO – NEM Vision “an ICT enabled free market, where customer devices and grid systems can efficiently trade and operate.”
- Key considerations:
• The faster technology changes the slower regulations may adapt.
• Outcomes need to be service orientated and ICT is critical to this transformation
• Market design must remain technology agnostic yet prescriptively safe, reliable and connected.
• We need a long term strategy, not just project by project thinking which only supports the development of proprietary features.
• By increases transparency and access to information, while protecting proprietary information and privacy in a DER management architecture the distributed energy market will evolve.