Huglo Process
July 22, 2020

What Will the Electricity Grid of the Future Entail?

Australia’s electricity system is undergoing a profound evolution. It is shifting from a system based on a one-way distribution of power from large-scale thermal generators to a more decentralised structure in which energy comes from many smaller generators. These generators range in scale from wind and solar farms to residential installations, from which power may flow back into the grid.

Australia has already seen a huge uptake in residential solar systems with ore than 2.2 million households choosing to install this technology. This has been supported by generous government subsidies that provided a guaranteed export value for the energy exported back to the grid.

These distributed energy resources (DER) which produce electricity or actively manage consumer demand include solar photovoltaics (PV), batteries and electric vehicles (EV), as well as demand-responsive appliances such as hot water systems and pool pumps.

What Does This Mean for Consumers?

The end result of all these changes to the grid mean consumers will find themselves as a core participant of the industry. No longer will consumers just be a consumer of electrons and now they will be called upon to contribute to the operation of the grid. Additionally, given the increase penetration of intermittent generation, the demand side (consumption) will need to be responsive to the changing dynamics such as weather. This creates an opportunity for consumers to get better returns for their investments in solar and batteries as well as changes to the way we use electricity.

Virtual Power Plants

A virtual power plant is a series of separate renewable energy generators such as rooftop solar panels, wind farms, or hydropower that is linked together with load storage and control systems into a coordinated network. By combining these assets, it's possible to operate them as if they were one large generator like a traditional coal or gas fired power station even though each of the generating assets remains independently owned and operated.

The aim of creating a virtual power plant is to balance out electricity generation and usage loads by smartly distributing the power created by the various assets in the network. This maximises the amount of power that each asset can produce, enables the efficient trading of excess power on an energy exchange, and ensures a smooth supply of electricity that won’t overwhelm the transmission system. See further detail on this in our blog post.

Demand Response

Also referred to as demand management, this is a relatively new outcome for Australian businesses and consumers. Essentially it involves electricity users being paid to switch off or reduce their consumption in periods of high demand, such as extreme summer days when we all want to use our air conditioners. This helps the grid as it saves the distributors having to build more costly poles and wires to ensure demand is met.

We have seen trials of demand response for consumers over the last couple years where households could voluntarily sign up to be part of the program. Those households could sign over control of some appliances, such as pool pumps and air-conditioners, so retailers could turn them off if necessary. Or households may agree to be sent a message asking them to cut use. Those who did would get a discount on the next bill, or a cash bonus.

Virtual Storage or Storage as a Service

A third innovation that is currently being explored is the build of community batteries. These are installed in your suburb and will enable households an alternative to purchasing a residential battery. This infrastructure will offer households the alternative to time shift their residential solar generation. Households will pay a storage fee, to virtually store their export generation which they can then utilise when they get home from work.

These and more exciting innovations are coming to the Australia electricity market, and there is a need for a new model to help consumers maximise their solar and battery investment. Huglo is your partner to help you through the market changes. Sign up with Huglo today.

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