Presentation Title Presentation Sub-Title

22
The NEO-NEM Electricity sector trends, regulations and adaptation to distributed energy resources Craig Chambers 2016 Summer Study on Energy Productivity

Transcript of Presentation Title Presentation Sub-Title

Agenda

Unpack the NEO

Interoperability Challenge

Insights into the future NEO – NEM

Global Insights

Definition of Distributed Energy Resources (DER)

2015-17 Embedded

Network Customer

Choice

2016-17 Transmission Connection

and Planning Arrangements

Regulatory Evolution Long term interests of consumers & efficient operation

Time

2012 Power of Choice

2016-?? Network Credit Determination

2011 Avoided TUos and Network

Support Payments for

Embedded Generators

2011 SENEs

2011 Expanded

DMIS

2013 Small

Generator (5-30MW)

Registration Exemption

2014 Customer access to

consumption data

2014 Solar Power

Purchase Agreement exemptions 2015-17

Metering Competition

2014-15 Chapter 5 & 5A amendment for

Embedded Generators

2015-17 Network

pricing cost reflectivity

2015-19 Renewed DMIS/A

2013 Transmission Framework Review

Market Evolution toward a “NEO-NEM” Efficient Operation of National Electricity System

G G IPP EG

T

WHOLESALE COMPETITION

§ Generator Competition§ Retailers have choice§ Market operator

AEMO

D/R

Despatch

Meter Data

Consumers

D/R

Consumers

MONOPOLY

§ No Competition§ No Choice§ Government Ownership

G

T

Pro/Consumers

DER

G IPP EG

T

Power

FULL COMPETITION

§ Independent system operator§ Data competition§ Cost / Revenue Reflectivity

ISO

DR

TPA

R

Data

DAs

TPA

$

$DER

G G IPP EG

T

Power

RETAIL COMPETITION

§ Consumer retailer choice§ Wholesale market operator§ Open network access

AEMO

R RR

Pro/Consumers DER

$

Meter Data

Dis

patc

h

D

LegendG – GeneratorAEMO – Australian Energy Market OperatorISO – Independent System OperatorIPP – Independent Power Producer

EG – Embedded GeneratorT – Transmission ProviderD – Distribution ProviderR – Retailer

DAs – Data AgentsTPA – Third Party AggregatorDER – Distributed Energy Resources

Interrelation required to unlock the market

Intelligent, reliable and economical data management

Continued growth of RE and DER is inevitable

Continued innovation in enabling infrastructure and hardware

DER

Enabling Hardware

Software

Regulations Regulations that enable the DER potential

Interoperability Challenge

ICT and Market Challenge

Image Source: Smart Grid Primer

We currently have disparate networks that are crudely interconnected, issues include:

An agent may be capable of providing a service (or set of services) to the system but may lack the information required to do so effectively.

Future network ICT topology

Source: National Institute for Standards and Technology (NIST) Framework and Roadmap for Smart Grid Interoperability Standards

Open Grid

System Reliability & Capacity Mgt

Smart GridEnergy

Trading & Energy Mgt

Energy Services Co.

Independent System

OperatorDespatch

Compliance

Trading

Market Clearing

Distributed Energy Resources

Trading

Billing

Customer Service

Power Quality Regulation

System Operation

Data Agents

Smart Meters

Safety

Aggregation Services

Cyber Security

Scheduling

Forecasting

ICT

Regulations

Policies

Standards

Interoperability Challenge

Source: Smart Grid Architecture Model, Siemens

Key Considerations and Challenges Today

• Policy and regulatory framework

• Unclear business case

• Different system operation layers

• Legacy systems integration, information gaps and diverse and numerous data types

• Focus has historically been on automation and protection.

• No standard or common information model

• Lack of harmonisation protocols and standards

• Validation of approaches

• Vendor momentum

Tomorrow

• Who is the data custodian and system operator?

• Development and prioritising an overarching architecture

• Privacy and cyber security

• Financial commitments

• Institutional resistance

• Testing and validation of approaches and codes

• Redefine critical infrastructure protection and reliability requirement

• Ability to perform the dynamic state estimation in real time

Insights into the NEO-NEM

Role of Aggregator/Operators Many claim a need for aggregators without clearly delineating how exactly the aggregators are or will create value. The ultimate question is will the model be a DSO, ISO or intermediate levels of aggregation from separate parties.

System Value

Private Value

Current Regulations &

Technology

Advanced Regulations &

Technology

Opportunistic Aggregation • Inadequate regulations • Flaws in system balancing value • Inefficient locational prices and network charges

Transitional Aggregation • Manage complexity and engage stakeholders • Close information gap • Coordinate system planning and operation

Fundamental Aggregation • Economies of scale • Economies of scope through bundling • Risk management, competition and innovation

Source: The Value of Aggregators in Electricity Systems, MIT

Possible Future Market Framework

ISO (AEMO) TNSPs Wholesale Market Dispatch Scheduling & Trading Generation Planning Inter-regional Planning Ancillary Services

Transmission Planning Connections Operations and Maintenance

DSO DER Dispatch Distribution level scheduling

Integrated Planning Trading Platform

DO Distribution Operations

Connections Engineering Analysis

DER DER Operations

End-user Device Analysis

Source: Adapted from Berkley Lab, Distribution Systems In A High Distributed Energy Resources Future, Oct 2015

Adaptation Considerations

• Redefine the NEM to remove the inefficient biases toward greater interoperability

• Data transparency will inform better decisions

• Measure and monetise the locational and diurnal value (+/-) of DER in the system at new nodes.

• Align tariffs to efficient outcomes for both consumer and industry

Craft

a Dist

ribute

d

Energy M

arket

Enable data

transparency

Whole

of S

ystem

Plannin

g

Cure the Tariffs

Disorder

Global Insights

Global Insights

USA - California Being the national leader of installed PV capacity California DER uptake is spurred by renewable targets and they are pursuing mandates to ensure DNSPs better integrate DER onto the grid. See California ISO aggregator plan

USA – New York Fears of repeated power outages caused by natural disasters such as Hurricane Sandy are the drive behind NY states Reforming the Energy Vision (REV) program.

Japan Rising power prices and a consumer focus on self-sufficiency post the Fukushima nuclear disasters has lead to greater uptake of DER and micro-grids.

India Focus is on using DER, renewables and smart technologies to achieve their goal of electricity supply to 100% of the population by 2027.

UK Vodafone has won a £75m contract with Scottish Power Energy Networks to run performance monitoring and fault identification systems for more than 30,000 substations and over110,000 kilometres of lines.

Europe Smart Grid Task Force is focused on: 1. Standards 2. Cyber Security, data

protection and privacy 3. Regulatory Frameworks 4. Infrastructure 5. Project Implementation

Conclusion

Future Scenarios Where to start?

- Define the cost benefit of change

- Redefine the future utility and market frameworks/rules

- Close the ICT gap & strive for greater interoperability

- Craft the distributed energy market and transaction platform by developing standard system operating procedures

- Create standards and/or adopt others such as NIST, IEC, ISO ZigBee, IEEE, HomePlug, OpenADR etc.

Regulated Competition

MicroGrids Prevail

Aggregators/Traders Prevail

Markets Prevail

Open & Transparent

Pricing

Network Adapts to

Market

Market Adapts to Network

Limits

Fragmented Pricing

Concluding takeaways

- NEO – NEM Vision “an ICT enabled free market, where customer devices and grid systems can efficiently trade and operate.”

- Key considerations:

• The faster technology changes the slower regulations may adapt.

• Outcomes need to be service orientated and ICT is critical to this transformation

• Market design must remain technology agnostic yet prescriptively safe, reliable and connected.

• We need a long term strategy, not just project by project thinking which only supports the development of proprietary features.

• By increases transparency and access to information, while protecting proprietary information and privacy in a DER management architecture the distributed energy market will evolve.

Thank You

Craig Chambers

[email protected]