Next generation energy system - Are we there yet? Dr Phil Blythe and Skye Holcombe Henley 30 March 2016

When Sydney’s electric streetlights were switched on for the first time in July 1904, government officials, electricity planners and enterprising folk would have marvelled at the vast opportunities that the dawning of the electricity era would deliver. Only the biggest dreamers would have envisioned a time when the country was linked via the largest interconnected grid in the world, where energy is traded in a spot market like any other commodity.

Having successfully created a centralised electricity system, we now find ourselves transitioning to the next generation energy system where electricity is again generated locally; an era characterised by distributed resources and energy services at the periphery of the grid.

Not since the creation of the National Electricity Market (NEM) in 1998 has there been such a buzz (pun intended) about the future role of the grid.

The emergence of a new genre of internet-enabled energy technologies has elevated the conversation beyond the smart grid to the Grid Edge - a conceptual location that has gained traction since the term was coined in 2014 by Greentech Media to describe the profound market shift away from centralised grid infrastructure. 

So if we are on the cusp of a new energy system, what does it look like, where does it leave the grid and what changes will it bring to how people, specifically large consumers, engage with energy?

The next generation energy system involves a more diverse variety of technologies that will provide consumers greater freedom of choice. As others have predicted before us, the penetration of battery storage systems will be a game-changer for how businesses and households perceive and manage their energy use. Affordable storage will likely drive a new market for utility-scale and community-scale solar and provide greater energy security for remote communities via minigrids.

In recent years we have seen greater activity in demand side management (DSM) than ever before with large consumers embracing technologies that automates equipment use to avoid costly peak load periods. This simple concept, made possible by Cloud-enabled software smarts, is shifting traditional patterns of energy consumption and delivering two key benefits: lower energy costs for consumers and greater utilisation of our grid infrastructure.  Finally, we have moved on from smart meters to actually delivering smart services that provide savings for consumers.

The technology driving this quiet revolution in our electricity grid is cloud-based software platforms, with the capability to forecast electrical loads, monitor faults and capacity limitations in the grid, and dispatch distributed resources – all in real time. This software has also expanded the cache of tools available to utilities for integrating and accommodating the new wave of energy technologies. At the household level, new appliances that are Demand Response Enabled (DREDs) – for example air conditioners, pool pumps and water heaters – can now be economically enabled to assist utilities in managing grid constraints during times of peak use.

No doubt, Elon Musk has captured the imagination of home owners with the lure of independence from utilities, and energy storage is implicitly bringing about a step change in the Australian marketplace - now the fastest growing solar and storage market in the world. However, despite feverish discussion about the rapid rollout of battery systems and off-grid homes, large scale changes to the way the grid operates will take some time, and will not be restricted to battery storage alone.

What of the grid longer term? There’s no doubt that a paradigm shift is underway as new technologies and services place new demands on how infrastructure is used, but the grid will remain the essential backbone to the whole system. As the uptake of distributed resources intensifies, the challenge for utility businesses will be to reimagine the operation of the grid, finding ways to monetise their assets, and to integrate and collaborate with new technologies without compromising reliability. 

This article was originally published in the March 2016 edition of Efficiency Action, the EEC's monthly e-newsletter distributed exclusively to EEC member.

Phil and Skye from GreenSync will expand on the themes explored in this article in the next edition of Efficiency Insight, the EEC's quarterly e-zine, distributed in May 2016.