der integration roadmap and workplan
TRANSCRIPT
D
ENERGY SECURITY BOARD
DER INTEGRATION ROADMAP AND WORKPLAN
SEPTEMBER 2020
Dr Kerry Schott AO Independent Chair Energy Security Board
David Swift Independent Deputy Chair Energy Security Board
Clare Savage Chair Australian Energy Regulator
Merryn York Chair (Acting) Australian Energy Market Commission
Audrey Zibelman CEO and Managing Director Australian Energy Market Operator
Contents
1 Purpose and overview ...........................................................................................4
2 Vision and outcomes for DER integration ..........................................................5
Outcome 1: Support a secure and reliable electricity system ............................................. 5
Outcome 2: To support improved distribution network management ................................. 6
Outcome 3: To unlock the value of DER services .............................................................. 6
2. Dimensions of DER integration ............................................................................7
Technical integration .......................................................................................................... 7
Regulatory integration ...................................................................................................... 10
Market integration ............................................................................................................ 11
3 Pathway to DER Integration ................................................................................14
By the end of 2020 ........................................................................................................... 14
By the end of 2021 ........................................................................................................... 15
By the end of 2022 ........................................................................................................... 16
By the end of 2025 ........................................................................................................... 17
4 Road to 2025 and beyond ...................................................................................18
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1 Purpose and overview
Distributed Energy Resources (DER) are already an important part of the Australian electricity system and will be even more significant into the future. By 2030, the Australian Energy Market Operator (AEMO) expects approximately 50 per cent of consumers to have either solar PV or controllable load; and at times during the day distributed generation may constitute up to 90 per cent of the load across the National Electricity Market (NEM). Increasingly as variable renewable energy begins to dominate the transmission supply mix, DER could be used to provide services such as ramping, essential system services (ESS) and reserves to ensure the system operates safely, reliably and securely.
The ESB’s objective is to optimise the benefits of DER for all electricity system users, regardless of whether they own DER or not. The potential benefits of efficient integration DER are substantial and the timely development of supportive technical standards and requirements, regulations, and market design are essential.
In contrast, a system that does not provide consumers with choice or reward supportive behaviours could drive up costs. Electric vehicles could add to peak demand instead of smoothing it, zero marginal cost solar generation could be inefficiently constrained, prices could become more volatile instead of less, and without regulation consumers may miss out on value created by their DER.
This Roadmap sets out how the ESB’s vision for DER integration and connects to key outcomes: a secure and reliable system, improved distribution network management and the optimal sale of DER services. This roadmap lays a pathway for technical, regulatory and market reforms. The ESB’s vision for DER integration is focused on consumer outcomes, enabled by effective distribution network planning and investment, and secure management of the power system.
A coordinated approach to the technical, regulatory and market reforms will be the difference between a high cost, piecemeal integration and a lower cost, phased integration that can meet both consumer expectations, network requirements and power system needs.
Having regard to the work program identified in the 2019 DER Integration Work Plan and possible areas for future work, this document ties together, as clearly as possible within a rapidly changing system, how the ESB envisages the future for DER integration will unfold and what needs to be done to ensure the benefits of DER are unlocked in a timely manner. For each of the critical path activities, it outlines which organisation(s), inside and outside the ESB are leading current work.
The ESB is working hard in collaboration with a number of organisations to identify and address current and future challenges and opportunities associated with efficiently DER into the electricity system. The ESB, in partnership with the market bodies, has an important role to play in leading and collaborating with industry to ensure these reforms are coordinated and meet the overall vision for DER integration. The ESB has been working on how to successfully integrate DER into the electricity system for the last eighteen months in partnership with the other market bodies and stakeholders. This Roadmap will be a foundational document for the integration of DER leading into and beyond the Post 2025 market redesign. It will continue to evolve, just as the technology behind DER does.
This Roadmap is being released coincidentally with the ESB’s post-2025 consultation paper which covers wide-reaching market reforms to meet the needs of Australia’s changing energy system. It is important to note that the post 2025 market design work will go beyond what is in this document and is likely to have further implications for regulation and technical issues.
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2 Vision and outcomes for DER integration
The DER integration roadmap outlines the relationship between the vision, desired outcomes, the dimensions and the priority work areas to support those outcomes. The roadmap is summarised by the figure below:
Figure 1. ESB DER Integration Roadmap
The ESB’s objective is to optimise the benefits of DER for all electricity system users. This objective is achieved when DER is efficiently integrated into the electricity system.
For DER owners, the efficient integration of DER would mean they can optimise the return on their investment through the operation of their DER. This could range from using their DER for electricity bill reductions, to access and participate in the growing number of new energy services markets or other DER service procurement mechanisms, or, most likely, a combination of these.
Efficient DER integration will also provide significant benefits to non-DER owners and all system users through lower total system costs. Total system costs will be lower where DER drives down energy costs, for example, by providing near zero marginal cost energy as well as essential system services in competition with traditional providers. Devices or software that enable load flexibility could help deliver more efficient use of existing network infrastructure and help integrate more variable renewable energy into the market and system. Effectively integrated DER can also provide services that support the reliability and security of the system, helping AEMO and network businesses maintain a reliable and secure system.
In order to achieve the objective, DER integration needs to achieve the following three outcomes.
Outcome 1: Support a secure and reliable electricity system
Any future electricity system, regardless of its generation mix, will need to continue to provide secure and reliable electricity supply to customers. As DER penetration increases, it can impact the way that the electricity supply system behaves and provide opportunities to support system security and reliability. System operation capability needs to be reviewed and renewed for a high DER environment, as well as the effective technical integration of DER hardware and software into the electricity system.
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Outcome 2: To support improved distribution network management
If effectively and efficiently integrated, DER should support improved distribution network operation and improve network utilisation. To deliver this outcome, a number of technical and regulatory changes are needed. In particular, the economic regulatory framework governing them need to include drivers for the efficient and effective integration of DER into distribution networks. This include efficient investment by DNSPs to support the deployment of DER.
Outcome 3: To unlock the value of DER services
This outcome requires the efficient integration of DER into current and future wholesale, FCAS/essential system services and network services procurement markets. ‘Market’ integration is used here to cover any form of procurement of services that can be provided by DER, including through regulated contracts and off-market transactions. This is done with the aim of unlocking value to both the owners of DER and the wider market.
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2. Dimensions of DER integration
The outcomes discussed in Chapter 1 of this Roadmap can be achieved through a combination of technical, regulatory and market actions. The best solution depends on the issues or challenges presented. Conceptually, engineering issues are usually best addressed through technical responses where these are straight-forward (e.g. standards, controls and settings). Economic challenges due to the changing costs of maintaining system security or reliability may need market solutions. For regulation and market design, issues of consumer trust and non-financial engagement require social science understanding.
Figure 2. Dimensions of DER integration
Technical integration
Technical integration of DER is fundamental and foundational. Electricity systems were not designed with DER in mind and there are increasing technical challenges and opportunities arising as the infrastructure adapts to multi-way flows of energy. Increased visibility is needed by both DNSPs and AEMO to support management and planning of the system. AEMO has a major focus on technical integration and has documented the detailed challenges in a number of reports.
The scope of technical integration includes device, interoperability, communication and cybersecurity standards, the governance of DER technical of standards and enabling changes to DNSP systems such as the development of standardised approaches to dynamic operating envelopes (which will expand DER exports by time of day and location within the technical limits of distribution networks).
DER technical standards need to support system security, distribution network operation and also the ability for DER owners to be rewarded for providing DER services.
System security and operations Figure 3 below shows the various timescales at which DER technical integration is required for AEMO to ensure power system security.
The most immediate challenge for system security relating to DER is the way in which the resources respond during system disturbances (‘fault ride-through’). This can be addressed through device standards, i.e. updates to AS4777 for inverters. This work to develop initial minimum technical standards is underway through AEMO supported by a Distributed Energy Integration Program (DEIP) workstream of stakeholders and is high priority for AEMO.
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The response of inverter-based systems to disturbances needs to be reviewed in case there is a need to replace devices without sufficient ride-through capabilities (i.e. pre 2016 inverters, part of household solar PV systems). AEMO continues to review these issues and will propose further changes if needed.
Figure 3. AEMO’s timescales for power system operation, applicable to DER
In addition, standards are required for industry wide interoperability/communication and cybersecurity. Again, these are being developed by AEMO in collaboration with a DEIP working group and the Commonwealth Government respectively.
Future standard setting needs to be done in a coordinated, agile, efficient and effective manner. To this end, the ESB has proposed the creation of a DER Standards Governance Committee to oversee the development of DER technical standards. This is expected to be in place mid-late 2021 and will set a vision and a workplan for future technical standards.
To ensure a secure system there also needs to be a review of system operational capability in a high DER environment. This drives the need to review load models, emergency schemes such as under frequency load shedding and blackstart capability – all of which are impacted by increasing amounts of DER in the system.
Changing shape of the supply/demand curve Due to the highly correlated behaviour of solar PV during the day, there are concerns about the potential for negative minimum demand in the middle of the day and in some regions of the Australian electricity system. Negative minimum demand makes it challenging for AEMO to manage system disturbances. This is being addressed in South Australia through interim network operational measures in the short-term; with load shifting and battery take-up incentivised in the short to medium term; and will need to be taken into account in the post-2025 market design for the longer term. AEMO has recommended actions to address minimum demand in its Renewable Integration Study. These include new standards and processes to enable emergency curtailment for new PV installations in SA (and potentially other NEM regions). Jurisdictional instruments have been proposed to address the issue in SA in the short term.
Increased ramp rates around sunset are also an operational issue for AEMO. There are a number of actions listed in the Renewable Integration Study to assist AEMO with ramping, such as trialling and implementing a ramping forecast and classification prototype. While ramping is a technical issue, tariff reform is a key market reform for addressing this challenge and is underway through DNSPs. It could also be addressed through a range of technical, regulatory and market-based measures including greater demand response/load shifting (e.g. pool pumps and hot water systems), incentives for EV charging and discharging, greater battery use and more efficient appliances. This is one example of the interactions between the different dimensions of DER integration. Successful integration of DER will require technical regulatory and market solutions and will need to be carefully deigned to ensure investment required by DER owners and costs to all consumers is minimised.
Distribution network operations Distribution businesses in turn will need to manage their networks more dynamically to understand, manage for and optimise the access to and potential network use of DER.
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This means developing systems in place to provide visibility of DER, communication and interoperability standards and protocols, together with the development of dynamic ‘operating envelopes’ to expand the access of DER to the grid. Required capabilities identified by the Open Energy Networks project jointly undertaken by the ENA and AEMO under these topics are:
• DNSPs defining network visibility requirements and network export constraints:
o Define DNSP requirements for increased network visibility and development of more accurate LV models
o Identify and communicate network constraints to maintain network operations within required parameters (operating envelopes)
• Establish an iterative and targeted approach for the timing of investments required to provide network visibility to support the optimal levels of safe, secure and reliable access for DER.
o Defining common communication requirements for operating envelopes:
o Define common protocols for operating envelope communication
• Establish Australian standards and/or guidelines to support the establishment of operating envelopes
o Define common data access permissions
• Supporting development of an industry guideline for operating envelopes.
These activities are largely underway through numerous projects and trials, and energy market institutions are looking to assist with these processes where appropriate.
Improving LV network visibility is a critical path action recognised and being progressed by DNSPs and investigated in the ESB’s energy data strategy. DNSPs are undertaking different approaches to improving visibility of their LV networks depending on their circumstances. For example, in Victoria all DNSPs have visibility through smart meter data. In South Australia, SAPN has modelled its network by feeder type and hosting capacity based on 14 standard types and is also purchasing data from third party providers.
Communication and interoperability standards and protocols will enable aggregators and retailers (and in some cases DNSPs and AEMO) to communicate with DER devices and software. The standardisation of architecture for this communication is a complex task. Dynamic operating envelopes are already being trialled. SAPN’s trial system sends signals about the forecast availability of the network for DER exports. SAPN’s system, currently being developed through trials, aims to set 5 minute ‘operating envelopes’ to DER 24 hours in advance. This would be far more beneficial to DER owners than static limits or constraints because it enables greater optimisation of DER services. The ESB is working with ARENA on how to support the nationally consistent uptake of operating envelopes across DNSPs and further work on this will emerge over the coming years.
Coordinating transmission level planning and forecasting with distribution level planning will also be needed. DER will have an increasing impact up to the transmission level, impacting energy flows in both directions. Therefore, ensuring that forecasting and planning uses the same assumptions and forecasts is vital. Ideally, network planning will be nested and interactive, with aggregated distribution level outcomes to be considered in system planning tools such as the Integrated System Plan. Integrated network planning is underway in California and it is important that we rapidly consider how this could be better enabled in the NEM. This is in scope for the DER Steering Committee.
Critical path activities for technical integration therefore are:
• DER technical standards in place
• Review system operational tools for high DER environment
• Governance arrangements for DER technical standards
• Improved DNSP systems to integrate DER, including:
o Improved Low Voltage network and connection point visibility
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o Implementation of dynamic operating envelopes.
• Coordinating transmission and distribution planning with respect to DER.
Regulatory integration
Regulatory integration is primarily about updating the rules and regulations to support the changing consumer, communications and technology landscape. The National Electricity Rules (NER) were not written with DER in mind and regulatory reform is needed to align responsibilities and incentives for DER integration. Regulatory reform could also cover how DER should be taken into account in DNSP and TNSP planning.
Integrating DER will increasingly become core to DNSPs’ operations, and their financial rewards will need to reflect this responsibility. There’s also the potential for DER to be used to provide network services and so lower costs for all energy system users.
As mentioned above, improved network visibility is a key step to distribution network operations in a high DER environment. There are a variety of changes needed to improve network and system operation to incorporate DER. These may or may not require regulatory changes; some changes may be able to be undertaken within the existing DNSP rules and revenue regulation. In the short term, the Australian Energy Regulator is looking to provide guidance on expenditure for DER integration through a guideline and a standardised ‘Value of DER’ method for DNSPs to use in their revenue proposals.
As DER adoption increases, it will create new challenges for the networks – much the same as increasing load has for the last century. The regulatory models, and DNSP systems will need to adapt to ensure that the move to a bi-direction grid is managed to deliver the best possible outcomes for all consumers.
DNSPs’ responsibility for DER integration needs to be clarified and strengthened as a foundational action. Then there’s a need to ensure associated changes to revenue regulation to support these responsibilities.
Three rule changes have resulted from the DEIP Access and Pricing work program. Three rule changes have resulted from the DEIP Access and Pricing work program. The proposals focus on three key areas:
1. Updating the regulatory framework to reflect the community expectation for DNSPs to efficiently provide export services to support DER.
2. Promoting incentives for efficient investment in, and operation and use of, export services.
3. Enabling export charges as a pricing tool to: send efficient signals for future expenditure associated with export services, reward customers for actions that better utilise the network or improve network operations and allocate costs in a fair and efficient way.
This includes a proposal for new planning around DER integration for DNSPs which goes to the regulatory reform needed to assist the joint incorporation of DER into distribution and transmission planning. This is both a technical and regulatory integration critical path activity.
AEMC will consider updating the NER and National Energy Retail Rules (NERR) to take into account of the evolving role of distribution businesses, especially for DER integration. This includes whether obligations need to be established in the rules to support DNSPs in providing access to and optimising existing, or investing in additional, DER hosting capacity and associated remuneration changes. This rule change process is at the heart of the critical path action needed for regulatory integration of DER.
Ongoing work on tariff reform is also relevant here. This is an ongoing progress through trials and annual tariff structure statements. The AER is continuing to look for ways to support the acceleration of cost-reflective tariffs.
DER providing network services DER can be called on to provide a range of network services and can also be constrained by network limits. The sorts of ‘non-network alternatives’ DER can provide include:
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• Network extension (deferral)
• Network augmentation (deferral)
• Network replacement (deferral and de-rating)
• Network operation – including voltage management, power factor management and emergency response
• Managing bushfire risk from lines (including allowing areas to stay powered even if a line has to be de-energised)
• Resilience.
The use of DER could substitute for traditional capex spend or for network operations/opex. It is likely there will be a progression over time from more static procurement of DER in place of capex to more dynamic procurement of DER. This is likely to be supported by increased levels of DNSP LV system visibility and higher levels of DER penetration.
In future, it also may be possible for consumers to trade their allocations of network capacity. Capacity trading is the idea that any premises connected to a network could chose to use or trade the network capacity they do not use. This could operate using static or dynamic operating envelopes to determine capacity. However, this concept appears to be some time in the future and operating envelopes are a critical path action to enable this future possibility.
Opportunities for lower cost network service delivery through stand-alone power systems and microgrids There’s also the possibility of changing network service delivery models. The falling cost of PV and batteries will increasingly create opportunities to provide electricity supply through standalone power systems (SAPS) and islandable microgrids in remote and regional parts of the NEM at lower cost than traditional supply. This is what Western Power calls ‘modular networks’: underground in high density areas, above ground in suburban settings and SAPs/microgrids in low density areas. In the NEM, regulatory changes are underway to enable DNSPs to provide SAPs for consumers where it is cost effective to do so. Further regulatory change to revenue regulation to support ‘modular networks’ ie different network service delivery models, especially for managing any resulting stranded assets may be needed in the medium term.
In the medium term, a network revenue regulation model where networks are remunerated on the basis and the quality of these services of the services they provide (as opposed to capex and opex) could be considered. The AEMC conducts the Electricity Network Economic Regulatory Framework (ENERF) review annually to consider whether the economic regulatory framework for electricity networks is sufficiently robust and flexible to continue to support the long-term interests of consumers with increasing DER. In undertaking this work the AEMC will consider the interaction of competitive markets with those of regulated monopolies. This is an important consideration for our future market design.
Critical path activities in relation to regulatory integration:
• Improving DNSP systems to integrate DER, including
o Incorporate DER into Transmission and Distribution planning
o Consideration of modular networks
• Enhance DNSP requirements for DER integration and network revenue regulation to optimise use of DER
• Accelerate tariff reform and consider future pricing.
Market integration
Tariff and pricing reform is critical for DER market integration and there are further elements to consider. Prices that reflect the supply/demand balance, and tariffs that signal network constraints are important,
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especially for shifting load into the middle of the day when solar generation is high. In the longer term, machine-machine tariffs may automatically optimise the use of DER across network services, wholesale and essential system services markets.
The market integration of DER encompasses the potential for DER to provide services into the wholesale and essential system services markets as well competing with more traditional network solutions at distribution level (which is both a regulatory and market design opportunity).
The ESB developed agreed principles for DER integration at a workshop in August 2019 that DER will be valued and regulated equivalently to large-scale resources, including valuing supply and demand equivalently and valuing DER by time and location. These principles will be tested and further developed in the Post-2025 market design process.
Wholesale and essential system services markets DER can provide balancing for the wholesale market and essential system services markets, including providing market reserves. These are emerging possibilities, most likely to be most efficiently undertaken through aggregators which combine services from multiple DER.
To do so requires clear communications, data and interoperability standards and protocols. There are significant challenges managing the communications, computation and data-access challenges of millions of devices operating at system and market timescales of seconds to minutes. Likewise, enabling adequate interoperability between different manufacturers, aggregators and retailers will take time and persistence. Without such interoperability, DER may not efficiently integrate and deliver services. Hence the importance of technical standards as a foundation for market integration.
Appropriate DER market integration is important within the scope of the Post-2025 market design project to ensure all of the future markets and procurement mechanisms are as effective and efficient as possible given the growth of DER and allow for both the supply and demand side participation. The Post-2025 Market Design project is due to run until mid-2021. The design of a two-sided market is particularly important as it aims to harness supply and demand at all scales but especially supporting DER participation in both supply and demand. The Post-2025 two-sided market is looking to build upon other reforms underway promoting increased demand side participation. This will involve a design which unlocks demand and supply 'behind the meter'; designing new systems to govern how bidding takes place in the markets and improving the way that electricity buyers and sellers are described and regulated. The post-2025 market design includes the possibility of developing ahead markets and essential system services (ESS) markets and procurement arrangements in which DER could participate.
A range of activities are needed to ensure DER integration is effectively incorporated into the post-2025 market design. In particular, aggregators for DER participation in future markets need to be accommodated in the rules and this needs to be addressed swiftly. Similarly, definitions of market participants will need to be considered to support DER participation and it is likely that some version of multiple trading relationships may be needed to allow DER owners to optimise the value of their hardware and software by contracting with different parties for different service provision (e.g. separate contracts for vehicle-to-grid (V2G) charging and discharging and household supply and demand response). Some of these activities are being considered in the two-sided market workstream of the post-2025 market design, as well as current rule change requests relating to integrating storage in the NEM
The overall market design will need to consider how value-stacking of DER services will work, particularly to ensure effective competition for DER services for example for networks and ESS to enable optimal value from DER.
In addition, social science research shows that DER owners are likely to respond to non-financial incentives to provide DER services (for social good reasons), so this needs to investigated as part of the post-2025 market design, alongside financial incentives.
In parallel with the post-2025 market design, piloting the use of DER for network services, wholesale and FCAS markets and in local markets can continue. This is currently the focus of AEMO’s VPP Demonstrations program.
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Local markets are a term used to describe the trade of electricity at a local level often between customers in the LV or MV network. This term tends to be synonymous with P2P or peer to peer trading – in which actors at a local level, perhaps even neighbours can trade electricity between each other, i.e. buying solar from your neighbours’ roof. There are some trials of this concept but it is complex and made difficult commercially due to full charges for distribution and transmission currently being levied. However, there has been a successful trial of a local market using DER and taking into account network constraints on Bruny Island. This year AEMO is establishing a Victorian local marketplace trial. Such local trading requires a trading platform which takes into account the distribution network operating envelope and optimises DER supply and demand. In the Bruny Island trial, Sydney University developed the NAC – Network Aware Coordination platform which was highly complex software for optimisation even for less than 30 households
A further extension of this concept is the idea of ‘community energy’ where either there can be joint ownership of distributed energy resources and/or large-scale resources (like the two wind turbines in the Hepburn Wind Farm) and/or aggregation of the community’s DER. This makes the most financial sense where there is vertical integration of generation, networks and retail where the community owner (say a local council) can value stack across the supply chain and where the community owner is not-for-profit. In parts of the United States local municipal electricity suppliers have set targets for renewable energy and all residents are automatically enrolled in ‘community choice aggregators’ unless they opt for an alternative electricity supplier. Some distribution businesses in New Zealand are community owned and households and businesses receive dividends from the company’s operation at the end of each year. ‘Solar gardens’ are where low income households and renters who are unable to install solar panels on their own homes buy shares in a large PV system (which can be local or distant) and have the electricity generated from their ‘share’ deducted from their electricity bill. In New York, solar gardens were established with a 25% minimum low income participation. Solar gardens have been researched through theoretical pilots in NSW and Victoria but is not financially viable due to participants having to pay full network charges for their electricity.
Some DNSPs are already using DER to provide network services, primarily using the AER’s Demand Management Incentive Scheme (DMIS) and Demand Management Innovation Allowance (DMIA). Virtual Power Plant and local market trials to provide supply and FCAS services are underway, especially through AEMO and ARENA funding.
All these trials are providing vital insights especially on technical and consumer matters which will be able to inform market design.
Critical path activities for market integration are:
• Acceleration of tariff reform and consideration of future pricing mechanisms
• Incorporation of DER into the Post 2025 Market Design, especially:
o Streamlining market participant categories in a way that accommodates DER aggregators
o Considering ways to allow for multiple trading relationship at a customer’s site
o Enabling value-stacking of DER services
o Considering non-financial motivation of consumers
• Piloting DER for network services, wholesale, FCAS/ESS and via local markets.
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3 Pathway to DER Integration
DER integration will proceed through three overlapping stages, as shown in the diagram below. In the foundational stage, technical standards are put in place, especially to support system security and distribution network operation. Governance arrangements ensure standards can be updated and new standards created as needed, including to support DER market participation. For the facilitating participation stage, regulatory changes are made to support DER participation in the NEM, especially through smarter DNSP systems (a combination of regulatory and technical changes). Planning is underway for the full market participation stage where DER is active and optimised to unlock value across the system and markets.
Figure 4. DER Integration Critical Path
The timetable below shows what this might look like year-by-year between now and 2025, noting that the outcomes in the table below is likely to be influenced by the post-2025 market design project.
Table 1. ESB DER Integration Timeline
By the end of 2020
Action Relevant dimension(s)
Relevant MDIs and bodies of work
Initial DER standards in place supported by appropriate rule changes - with disturbance ride-through and minimum demand being priority standards
Technical AEMC consideration of Minimum Technical Standards Rule Change
AEMO technical standards consultation
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New governance arrangements for DER technical standards scope agreed by Ministers
Technical ESB Governance of Technical Standards Consultation
Options for improving hosting capacities based on LV visibility scoped
Technical & Regulatory
ESB Data Strategy
The AER is supporting networks to deliver increased hosting capacity for DER where this benefits all consumers.
Technical & Regulatory
AER revenue determinations
Identify communication, data and platform requirements.
Technical
(possibly Regulatory)
DEIP Operating Envelope Working Group
Trials of dynamic operating envelopes underway
Technical & Regulatory
ARENA-funded trials
Trials of access to ancillary services markets Technical & Regulatory
AEMO VPP trails
SAPN VPP trials
Improved coordination/shared assumptions and data between Distribution and Transmission planning
Regulatory Integrated System Plan
Incorporation of more sophisticated DER scenarios in ISP Technical & Regulatory
Integrated System Plan
Pilots and operational projects with DER as non-network alternatives underway
Market ARENA DEIP
DNSP Demand Management Innovation Allowance/Scheme
Accelerate tariff reform and consider future access and pricing mechanisms
Regulatory & Market
AEMC annual economic regulatory framework review
AER tariff structure statement process
Demonstration projects exploring Distributed Markets underway including the building of a shared platform for DER for DNSPs and AEMO.
Technical and Market
ARENA funded trials
Clearly articulate the pathway to DER integration including the sequencing of reforms in the post-2025 market design
All This document
By the end of 2021
Action Relevant dimension(s)
Relevant MDIs and bodies of work
New governance arrangements for DER technical standards in place
Technical ESB Governance of Technical Standards Consultation
DNSP hosting capacity continues to improve as improved voltage information available to DNSPs
Technical ESB Data Strategy
DNSPs
Dynamic operating envelopes working in SA, including shared interface with AEMO
Market ARENA DEIP
AEMO VPP trials
DNSPs
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Communication, data and platform requirements. defined and an industry guideline established for operating envelopes
Technical
(possibly Regulatory)
DEIP Operating Envelope Working Group
Further improvement in coordination/shared assumptions and data between Distribution and Transmission planning, through integration of DER into Distribution Networks in the ISP.
Technical ISP
Ongoing implementation of DER as non-network alternatives to account for evolving technologies
Market DEIP and DNSP funding
DNSPs responsibilities for hosting and supporting for increasing DER embedded in the rules.
Regulation AEMC
Framework to support the economic expansion of the grid for DER. Study of DER value complete
Regulation AER
Consultation on potential changes required to economic regulatory framework to support DNSPs’ efficient integration of DER – including issues such as community batteries, ringfencing, clarification of role for DNSPs and implications on economic regulation of networks
Regulation AEMC
DER incorporated into post 2025 market design Market Post-2025 market design
Consumer engagement articulating opportunities for DER value stack including access to the wholesale market and provision of network services.
Market Post-2025 market design
AEMC
Implemented SAPS regime (if law changes are made) and scoping of microgrid analysis to account for benefits of islanding sections of distribution network from wholesale market during market events as a shift towards modular networks
Regulatory DNSPs, as appropriate
Continual implementation of tariff reform, including consideration of EV specific tariffs
Regulatory AEMC, AER tariff structure statement process, DNSPs
By the end of 2022
Action Relevant dimension(s)
Relevant MDIs and bodies of work
Continued updates of technical standards with interoperability, communications and cyber security standards in place.
Technical ESB Governance of Technical Standards Consultation
DNSPs move towards ‘smarter’ network management through greater visibility and improved operations (supported by national standards, innovation funding, trials and by direction set in updated regulatory framework)
Regulation DNSPs
Framework to support the economic expansion of the grid for DER. DER Expenditure Guideline complete
Regulation AER
Consult on national standards for communication, data and platform requirements for operating envelopes
Technical DEIP Operating Envelope Working Group
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Commence operation of dynamic operating envelopes where there is sufficient DER to justify
Market AER
DNSPs
Changes identified in AEMC review of regulatory framework in 2021 implemented
Regulation AEMC
Continual implementation of tariff reform; consider implementation of vehicle-to-grid tariff arrangements
Regulation AEMC, AER tariff structure statement process, DNSPs
By the end of 2025
Action Relevant dimension(s)
Relevant MDIs and bodies of work
DER positively supporting secure and reliable system operation due to revised technical standards
Technical ESB Governance of Technical Standards Consultation
Commence operation of dynamic operating envelopes where there is sufficient DER to justify
Market AER
DNSPs
Comprehensive coordination or integration of distribution and transmission planning
Regulation Integrated System Plan/DNSP planning
Regulation and market design in place for DER to be participate in appropriate markets on a broader scale
Market Post-2025 market design
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4 Road to 2025 and beyond
The unique and evolving characteristics of DER mean that the NEM needs to change to enable the optimal use of DER. The objective is to optimise the benefits of Distributed Energy Resources (DER) for all energy system users. This roadmap lays a pathway to this objective across technical, regulatory and market integration which all interact.
Over the next five years, a collaborative and concerted effort will need to be made by market bodies, governments and agencies to prioritise items on the critical path. Like the rapidly evolving technology in the DER space, this Roadmap will continue to adapt based on learning in the market. Australia is leading the work is consumer take up of DER. With that in mind, this document will continue to be updated as milestones are achieved towards to final objective.
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Appendix: DER integration workplan for the market bodies
Technical Integration
Priority workstream Workstream goal Milestones
2020 (Q2) 2020 (Q3) 2020 (Q4) 2021 (Q1) 2021 (Q2)
T1. Device standards • Appropriate DER capabilities to enable grid support, interoperability, and to enable system support and customers to exchange value with the grid, should they choose to.
• Ensure appropriate compliance arrangements in place.
• AEMO: Rule change request for initial DER standards lodged by ESB, informed by AEMO – 30 April
AS4777.2-2015 published as an interim standard (tbc 6 May for September publication) including:
• Improve clarity around withstand requirements, specifically defining zones of operation (eg. momentary cessation) o Introducing Multiple Voltage
Disturbances withstand o Introducing ROCOF withstand o Introducing Phase angle jump
withstand • Enhancing Grid support functions for
voltage and reactive power, and frequency response.
• Improving the accuracy and stability of measurement systems used in these inverters to improve reliable performance characteristics for a range of grid disturbances.
• Designing suitable testing procedures that clearly show when an inverter is performing as required, or not.
AEMC: DER standards rule change process completed
• If approved, rule change will come into effect.
T2. Comms/interoperability standards and protocols
• AEMO: Rule change request for initial DER standards lodged by ESB, informed by AEMO – 30 April
• AEMO: Industry consultation on DER standards/guidelines for data communications (interoperability) and security established via DEIP.
• AEMC: DER standards rule change process completed.
• AEMO: Industry requirements for DER standards/guidelines for data communications (interoperability)
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and security finalised via DEIP.
T3. Cybersecurity standards
• Define interoperability and cyber-security issues and pathway for implementation
• AEMO: Commence industry consultation to define interoperability and cyber-security issues and resolution pathways through DEIP.
• AEMO: DEIP working group to produce final recommendations regarding interoperability and cyber-security issues and resolution.
• AEMO: Commence work on necessary regulatory and process changes.
T4. Data – for transparency and operations
• Appropriate level of data and information access to enable appropriate decision making at various levels of the system. i.e. AEMO to run the power system and market, networks to monitor and operate their network, thirds parties to officer services to consumers, consumers to make better /informed decisions around energy use and services.
• AEMO (DER data requirements): in consultation with industry, develop key data requirement enable DER integration to support planning, operational, market functions (mid-2020). Progress necessary regulatory and process changes. (note, will be developed consistent with the ESB data strategy and linked to API protocols).
• AEMC: Competitive metering arrangements review – development of Terms of Reference and pre-review consultation
AEMC: Competitive metering arrangements review - commencement
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Regulatory Integration
- Priority workstream - Workstream goal
Milestones
- 2020 (Q2) - 2020 (Q3) - 2020 (Q4) 2021 (Q1) 2021 (Q2)
R1. Planning • Efficient investment across the system to deliver reliable, secure and affordable services to consumers.
• AER: commence consultancy on Value of DER.
• AEMO: review the need to enhance the Integrated System Plan to support distribution planning, including by standardising scenarios and inputs for network planning.
• AER: Draft consultation paper on DER Expenditure Guideline for DNSPs.
• AER: Final consultation paper on DER Expenditure Guideline for DNSPs
R2. Ringfencing • Ensure distribution ring-fencing requirements remain fit for purpose and that DNSPs comply with their obligations
• AER Publish final distribution guideline.
• AER Publish draft transmission guideline update.
R3. Storage • The regulatory arrangement supports various business models for the delivery of storage into energy market.
• ESB: consultation report delivered, webinar held on report
• ESB: following consultation with industry, outline recommended approach.
ESB: as required, progress any regulatory changes.
R4. Non-networks alternatives (eventually transitioning to network services models)
• To ensure distribution businesses are making effective use of DER to provide network services.
AEMC: As part of the 2020 Economic regulatory framework review, analyse DNSPs’ uptake of non-network alternatives and consider if further reforms are required
• AEMC: Economic regulatory framework review completed
R5. Sandboxing • The regulatory arrangements provide a framework for trialling of new concepts and ideas (Minimum Viable Product, MVP) prior to full scale roll out.
• COAG EC: progress NEL changes to enable trial waiver and trial rule change mechanisms for sandboxing.
• AER: Commence innovation enquiry service (subject to resourcing).
R6. SAPS and Microgrids
• The regulatory arrangement supports and
• AEMC: DNSP-led SAPS - publish final report and
• COAG EC: response to AEMC
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create appropriate incentives around the establishment of standalone systems where it is more cost efficient to do so.
submit package of rules to COAG Energy Council
recommendations and progress rule/law changes as required.
• AER: Guideline updates following DNSP-led SAPS law and rule changes.
R7. Voltage investigation
• Understand the current state of voltage in LV networks across the NEM and consequences for PV exports
• Issue UNSW report with cover note and host webinar
• Liaison with jurisdictional regulators to investigate and act as appropriate
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Market Integration
Priority workstream
- Workstream goal Milestones
- 2020 (Q2) - 2020 (Q3) - 2020 (Q4) - 2021 (Q1) - 2021 (Q2)
M1. Demand response mechanism
• Encourage the effective participation of the demand side in the wholesale market by enabling third parties to access and aggregate DR resources and exchange value with the grid at times of peak.
• AEMC: complete review of customer protections framework for small customers. This will inform extension of DR and DER framework (refer to last item)
• AEMO: complete detailed design of wholesale demand services
M2. Distribution network access and pricing
• An efficient amount of both DER and network capacity is made available for exporting.
• Consumer choice is maintained, and consumer-led investments that support lower total energy costs are rewarded.
• AEMC: As part of the Distributed Energy Integration Program (DEIP), consult on possible regulatory reforms to distribution network access and pricing arrangements.
• AEMC: Assessment of rule change on network access, connection and charging arrangements (or AEMC commences work if no rule change submitted by mid-year)
M3. Network tariff reform
• To promote efficient demand response from end users, including investment and use of DER, to reduce network costs for the benefit of all end users.
• To send cost reflective network prices to retailers, to promote more innovation and choice in retail market offers.
• AER: Final decisions on revised Tariff Structure Statement proposals from SA and QLD distributors.
• AER: Draft decisions on initial Tariff Structure Statement proposals from VIC distributors.
• AER: Tariff Roundtable.
M4. Open Energy Networks (DMO and DSO models)
• Cross collaboration between AEMO and ENA to outline approaches and models to integrate DER into the network, whole of system, and market.
• AEMO: release final OpEN report (including cost benefit analysis).
• Next steps TBC
M5. Post-2025 market design
• Market design, including valuing DER services to ensure efficient investment and operation of the energy market to
• ESB: commission advice on incorporation of DER
• ESB: August consultation paper on
• ESB: December post-2025
• ESB: final recommendations mid-2021
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deliver a secure, reliable, and affordable energy services that supports consumer choice. i.e granular pricing signals, firming markets, ahead markets, etc.
into post-2025 market design initiatives
post-2025 market design
market design paper
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Relevant work linked to DER Milestones
- Workstream goal - 2020 (Q2) - 2020 (Q3) - 2020 (Q4)
- 2021 (Q1) - 2021 (Q2)
Innovation funding • Appropriate funds are allocated to enable investment in R&D to support delivery of value add frameworks to the regulatory regime, business operations, and consumer service delivery.
• Ongoing monitoring and action as required
Pilots, Demonstrations and Trials
• Undertake demonstrations to evaluate DER integration activities to ensure operational, market and consumer value leveraged.
• Evidence based approach to regulatory change.
• AEMO: Victorian DER Market Place trial to commence
AEMO (VPP trial): share trial learnings. Progress regulatory changes to formalise arrangements
EV roadmap • Integration of EV to support consumer choice and adequacy of grid requirements.
• AEMO/ARENA with DEIP: development of plan for EV standards, tariffs, etc
AEMO/ARENA: in consultation with industry and market institutions, progress priority actions.
System reliability and security
• The power system continues to be managed in a stable and reliable manner, given changes in risk profiles, including the effects of increased DER.
• AEMO: Renewable Integration Study released
Consumer protection • Appropriate consumer protections are in place regarding DER technologies
• AEMC: Proposed framework published on consumer protections and DER (via the Retail Competition Review)
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Contact details:
Energy Security Board
Level 15, 60 Castlereagh St
Sydney NSW 2000
W: http://www.coagenergycouncil.gov.au/market-bodies/energy-security-board