A new trial in Australia is tackling the regulatory aspect of DER marketplaces hoping to answer the question: How does a utility earn a return on customer-sited assets?
When California-based Jesse Morris saw a tweet from the California Independent System Operator (CalISO) asking Californians to conserve energy between 4 PM and 9 PM in order to help keep the grid stable on a hot summer day, he knew that CalISO could be tackling the problem in a much better way. That’s because Morris is the CEO of the Energy Web Foundation (Energy Web), a non-profit spun out of the Rocky Mountain Institute (RMI) that has created open-source (read, free) software that connects DERs to aggregators, utilities, and system operators so they can transact in the safest and most secure manner.
Fast forward to today and Energy Web has just completed a project with CalISO to help better manage its Flex Alerts. A Flex Alert is a call for consumers to voluntarily conserve electricity when there is a predicted shortage of energy supplies. When the ISO issues a Flex Alert, consumers are asked to cut back on electricity use, typically in the late afternoon and early evening hours (as energy produced by solar PV starts to drop off and people get off work and start to ramp up their electricity use).
As an educational and emergency alert program, Flex Alerts inform consumers when grid conditions are strained and conservation is needed to stretch supplies.
With the new system, California residents will be able to sign up to be notified when Flex Alerts take place and indicate if they plan to participate. Then, CalISO will be able to validate those responses by zip code, giving the grid operator better visibility into which areas of the grid might see some relief.
Plus, said Morris in an interview, if CalISO ever decided to award people for participating, “here we go. We’ve just set up a digital relationship between the Cal ISO and all these Californians and it would be very easy to then hook into the local utilities [like] PG&E, SCE the others.”
Morris estimates that California could have as much as 13 GW of flexible demand from distributed energy resources (DER) such as EVs, solar batteries and efficiency that it could be tapping if there was a market in place for DER services.
Australia’s Project EDGE is ‘tip of the spear’ for global DER marketplace development
Creating a market for DER is exactly what is on trial in Australia. Earlier this month, the Australian Energy Market Operator (AEMO), Australia’s power system and market operator, announced the architecture and technology partners for Project EDGE, a new initiative that will enable DER to provide both wholesale and local network services at enterprise scale within an off-market trial environment.
The trial participants include local market players AusNet Services and Mondo, and technology providers Energy Web, PXiSE, and Microsoft.
According to Morris, Australia is a perfect place to set up a trial like this because the country has quite a high penetration of DER. “There’s just more solar. There are more batteries. There is soon to be more electric vehicles,” he said in an interview.
The biggest questions that project participants hope to answer are on the market design side, said Morris. “Australia is really cracking the regulatory questions.”
How it works
Project participants break down this way: AEMO is the system operator, Mondo is the aggregator and AusNet is the distribution utility. Pixse, Microsoft and Energy Web are the technology providers.
Questions about how aggregated DER can provide services to the wholesale market are being tested around the world. Sunrun was the first in the US to announce that it would be bidding aggregated DER batteries into the wholesale market in New England. The project that Energy Web just implemented with CalISO makes use of DER in a similar way. Morris said they also have a project with PJM in the US.
“But then they [DER] are also going to be providing services to the distribution utilities, so that’s what’s being tested here in Australia,” said Morris.
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On the distribution side, DER can provide services like voltage support from smart inverters, said Morris. But since utilities can’t profit from using DER this way – today utilities rely on building new infrastructure in order to get a guaranteed return on money they invest to build out the grid – that’s what will be examined in Australia.
“So part of EDGE is about experimenting with that so that they can go to the Australian energy regulator and say, ‘hey, we’re doing all this stuff we’d like to earn a transaction fee on the software. We’d like to rate base some of the expenses and digital technologies we are implementing,’” explained Morris, adding, “That’s the other part of the experiment with Edge that I think is pretty interesting…defining those business models for these utilities.”
POWERGRID International will continue to explore the evolution of the DER market. Subsequent articles will examine cybersecurity, technology players, costs and more.