Non-network solutions EDPR Customer Forum 24 April 2018
Agenda 1. What are non-network solutions and why are we interested? 2. Summary of solutions have we implemented to date 3. Where the key opportunities lie for the EDPR 4. New solutions that we are working on 5. Build-up of non network proposal 24 April 2018 2
What are non-network solutions? When there is a need to make a capital investment to augment or replace network assets, there are two main categories of solutions: Network solutions E.g. upgrade a transformer to meet growing demand Non-network solutions E.g. reduce network demand to avoid or defer the network investment The two approaches tend to be very different: Network option Well known and understood Firm (reliable result) Long life asset Controlled by network Limited customer engagement Capex solution (RAB) Non-network option Limited experience & capability Greater uncertainty in result Shorter term solution Customer may have control May need high customer engagement May be opex solution 24 April 2018 3
The operating environment for non-network solutions The potential benefits of non-network solutions are becoming more well understood: Lower cost Greater flexibility Regulators New regulations to encourage the consideration of non-network solution, mandate an assessment for large projects, provide innovation funding Customers Expect cost minimisation, adoption of new technology and to be rewarded when benefits are provided to the network Shareholders Minimise the risk of over-investment and keep the network relevant 24 April 2018 4
Multiple applications for non-network solutions Defer capacity upgrades E.g. reducing peak demand via customer demand response E.g. Control of solar & battery systems to manage network voltage levels Manage solar/der uptake Nonnetwork solutions Defer replacement of assets E.g. reducing risk levels via embedded generation E.g. Stand-alone power systems to allow removal of network in high bushfire risk areas Improve network safety Improve supply reliability E.g. Large battery storage to provide backup supply to customers 24 April 2018 5
Non-network application: Peak demand management Electricity networks need to meet peaks in demand, but these peaks are rare High cost of peak network capacity is borne by all customers Network peaks are highly localised: Different peaks in different locations and at different voltage levels 24 April 2018 6
Solutions implemented to date Over the past 5 years, non-network solutions have focussed on managing peak demand growth Suite of demand management solutions developed and implemented across much of the network 24 April 2018 7
Case Study: Traralgon Power Station Traralgon Zone Substation needed a large transformer upgrade Business case assessed network and non-network options Negotiated with a non-network provider, NovaPower, to install 10MW of gas-fired embedded generation at Traralgon to offset peak demand Planned to defer replacement of transformer for at least five years Project became operation early 2013 Peak demand growth subsequently flattened and network support was no longer required after 5-year contract expired Contracted NovaPower generators at Traralgon 24 April 2018 Author, Department 8
Customer side Network side Range of other non-network solutions implemented to date Temporary mobile generators 4 x 1MW modular units Grid Energy Storage System Being deployed for reliability support 1MW battery system + 1MW generator Critical Peak Demand Tariff Applies to all large customers Incentivises load reductions on 5 days p.a. C&I customer contracts 20MW of load reduction under contract Focussed on areas of risk 9
Opportunities across 2021-2025 Demand management Opportunities concentrated in urban growth corridors to SE and N of Melbourne Residential driven demand, plus some commercial customers Population growth across 2012-2017 by LGA Reliability support Remote network areas tend to have poor reliability, with occasional unplanned outages of several hours duration Annual duration of unplanned interruptions, by Zone Substation Solar integration Areas of highest solar uptake often rural, and have relatively weak network that makes integration more difficult Solar installations continuing to grow in number and size Residential solar penetration rate, by LGA 24 April 2018 10
Customer growth by postcode 2012-2017 22 March 2018 11
Customer growth by postcode 2012-2017 Augmentation Projects: 1. New power transformer at Doreen Zone Substation to increase capacity and improve reliability 1. 2. New power transformer at Clyde North Zone Substation to increase capacity and improve reliability. 2. 22 March 2018 12
Demand management rationale Where network assets are at risk of overload, demand management can be applied to: Reduce risk level that network (and customers) are exposed to Defer or avoid asset augmentation 24 April 2018 13
New solutions being developed Non-networks innovation program focussed on residential solutions and the management of solar/der uptake 24 April 2018 14
Residential DM: Behavioural response Peak Partners residential demand response program piloted across 2017/18 Behavioural response achieved 30-40% demand reduction at peak times, across 70 customers Basic data portal using AMI data is a sufficient engagement tool Questions to be tested in coming years: What rate of customer sign-up can we achieve in a local area? What avenues are best to engage with customers & communities? How low-cost can customer acquisition be made? As the customer base grows, how much will performance per customer decline? How likely are customers to remain with the program from year to year? Do gamification or behavioural economics principles offer better responses? 24 April 2018 15
Residential DM: Appliance control Peak Partners also tested air-conditioning load control Most modern air-conditioners can accept control signals to reduce compressor load, while still operating the fan: 75% of rated capacity 50% of rated capacity 0% of rated capacity Image: www.onefourau.com Proven to be effective Known to have low customer impact Challenges: Cost per customer (usually requires control device + technician time) Air-conditioner may not always be in use at peak times 24 April 2018 16
Solar & battery storage orchestration Remote control and orchestration of customer solar & battery systems is firming as a key component of the future energy system: Provide network support services such as demand management Allow higher penetration of solar and other DER to connect to the network Key enabler to maximise two competing objectives: Customer choice Network asset utilisation Example project: Networks Renewed in collaboration with UTS 24 April 2018 Author, Department 17
Grid-scale storage AusNet Services implemented its first grid scale energy storage facility in 2013 The market for grid-scale storage is maturing rapidly, but still not fully standardised or integrated solutions Leveraging experience to date, we will continue to look for opportunities: Demand management Solar export management Reliability support Power quality support AusNet Services GESS facility. Image courtesy ABB 24 April 2018 18
Electric Vehicle Charging Management The EV challenge: = Uncoordinated charging: Large increase in peak demand Major augmentation program Costs to all customers Coordinated charging: Limited increase in peak demand Improved asset utilisation Lower prices for customers Coordination techniques: Special tariffs to encourage off peak charging Network support incentives to charging platform Dynamic control direct from AST (under a customer incentive) via different communications protocols 24 April 2018 19
Stand-Alone Power Systems A Stand-Alone Power System provides network-quality power without a network connection Typically comprises: Large solar panel array Large battery bank Backup generator Remote communications SAPS may be more economic than network supply in some circumstances: Long network requiring expenditure, but only small customer base High bushfire risk Low reliability Regulatory hurdles (currently not in line with NER) 24 April 2018 20
Build-up of non-networks proposal Non-networks implementation Funding: - Ex-ante opex allowance aligned to base year - Option to propose an opex step change - New Demand Management Incentive Scheme provides a revenue uplift for successful non-network projects Process: - Network planning process identifies scale of opportunities - Cross-check against base-year expenditure - Projects governed by Business Case and Investment Tests Non-networks innovation Funding: - Demand Management Innovation Allowance (~$3m) - option to propose additional network innovation funding Process: - Strategic analysis of future opportunities vs capabilities - Prioritisation based on customer value, maturity of solution, investment and resource levels 24 April 2018 21