The way energy is generated and consumed is rapidly changing. The Australian Renewable Energy Agency estimated that by 2050, up to 45 per cent of Australia’s entire electricity capacity will be made up of Distributed Energy Resources (DER) – meaning customer-owned generation and storage.
With this increase in DER, a number of new models offer opportunities for customers to buy and sell power differently in the future. Here we consider two in particular, Virtual Power Plants (VPP) and Microgrids.
A Virtual Power Plant (VPP) is where DER, along with energy loads, are connected via the cloud to manage power demand across a localised or wider network. It’s sometimes referred to as Demand Response, with a number of demonstration projects underway Australia-wide, including in Townsville where a 4MW battery is being added as part of a 135 MW VPP.
A Microgrid is a smaller group of DER and loads that are connected to a network but can also disconnect as a group in an ‘island mode’. The microgrid will typically be connected behind a common meter with each connection having a sub meter.
Both models can aggregate groups of energy users and DER, while allowing loads and generation to be balanced across many users, with benefits to customers and networks alike.
They may also have the added benefit of reducing grid losses as energy will travel shorter distances leading to lower investment costs in infrastructure with increases in reliability and reduced customer disturbances. These benefits all have the potential to reduce energy costs.
The government will soon announce the successful Community Microgrid demonstration projects. This will see a number of projects test how microgrids could improve electricity supply arrangements in off-grid and fringe-of grid communities in regional and remote areas. The program will provide valuable information and help to overcome barriers to these models.