AEMO opens registrations for participation in VPP demonstration program

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As the energy sector undergoes a momentous change, moving towards a decentralised generation model, the Australian Energy Market Operator (AEMO) is looking to harness the potential of distributed energy resources (DERs). In its latest move, AEMO has opened registrations for participation in its virtual power plant (VPP) demonstration program.

The program will test the potential of DERs aggregated into VPPs to deliver multiple value streams across frequency control ancillary services (FCAS), energy and potential network support services. The initiative, which will bring together existing pilot scale VPPs around Australia and jointly operate their portfolio of DERs, aims to benefit all energy users through a more efficient and affordable power system.

“Australia’s energy landscape is rapidly transforming, faster than most developed economies, creating power-system operation and design challenges, as well as presenting opportunities to create a future world-class power system,” said AEMO’s Emerging Markets and Services EGM, Violette Mouchaileh. “As the independent energy system and market operator, we believe DER growth can empower consumers to contribute scalable value to our future energy system by joining virtual power plants that actively participate in Australia’s electricity markets.”

Under the demonstration program, AEMO is establishing a framework to allow VPPs to demonstrate their capability to deliver services in contingency FCAS and assist energy markets. The VPP demonstrations will see participating VPPs trial a new specification to deliver contingency FCAS, and AEMO will observe how VPPs respond to energy market price signals, as non-scheduled resources.

The goal is to make VPPs visible to the market operator and use the data collected to inform changes to regulatory settings and operational processes and pave the way to smooth integration of VPPs before they reach commercial scale. Over 12 to 18 month, the program will also aim to provide insights on how to improve consumers’ experience of VPPs in future and understand what cyber security measures VPPs currently implement, and whether such capabilities should be augmented.

A growing pipeline of VPPs

Australia hosts some of the most advanced VPP projects in the world, particularly involving rooftop PV systems and battery storage, in both grid-connected and off-grid applications. Though most are relatively small – at around 5-10 MW, AEMO anticipates there may be up to 700 MW of VPP capacity by 2022.

Prominent grid-connected examples include the 36 MW Next Generation Energy Storage Program launched in Canberra in 2016 with more than 5,000 household batteries as a pilot round under the Australian Capital Territory’s battery subsidy scheme. The South Australian public housing tenants’ project known as the Tesla VPP is another such system. According to the state government’s last week’s announcement, the project is nearing a potential third phase which could see 50,000 homes connected to become the equivalent of a 250 MW/650 MWh network of decentralized power generating units in one of the world’s largest VPPs.

In addition to a number of projects initiated by state governments, Australian gentaileres have also been busy building DER networks, including AGL (5 MW VPP in Adelaide), Simply Energy (8 MW VPP also in Adelaide) and Origin Energy (5 MW plant in Victoria).

As a vital step towards increasing participation of VPPs in the National Electricity Market, the AEMO VPP demonstration scheme was underpinned by $2.46 million in funding from the Australian Renewable Energy Agency (ARENA). The agency also played a role in funding South Australia’s VPP trials with AGL and Simply Energy, and has supported Greensync’s deX platform, a digital marketplace for grid services provided by rooftop solar arrays, batteries and EVs owned by Australian homes and businesses.

“VPPs will play an important role in maintaining grid stability and managing peaks in demand by harnessing consumer-owned energy assets like rooftop solar and batteries,” ARENA CEO Darren Miller said. “More than two million Australian households have already taken up rooftop solar, and tens of thousands are adding home batteries, so it is going to be increasingly important to have the ability to coordinate and control these distributed assets – as well as other distributed assets such as smart appliances, solar hot water systems, pool pumps and electric vehicles. This trial is a crucial first step towards that.”