pv magazine Australia: What has been the reaction to the DER Roadmap – particularly from people involved in solar and battery storage?
Bill Johnston: I think they’ve reacted very positively. It is designed to allow even more people to enjoy the benefits of rooftop solar while maintaining security in the grid. You have to remember that WA, along SA and Queensland, has the highest penetration of rooftop solar in the world.
I saw the report described it as one in three homes on the South West Interconnected Network (SWIS)?
Well, it’s 32%, nearly one in three.
You mention the need to maintain system stability in the face of all of this solar, but what are the opportunities provided by distributed resources for the system, prosumers and also the WA solar sector?
There is immense opportunity because it allows for lower cost energy to be brought onto the SWIS and individual people to be part of the energy system…
And it’s clean energy as well of course.
It is fabulous because it’s carbon free.
How significant do you think it is that solar and battery households, the prosumer in the energy system, is becoming more mainstream?
There are some people that really want to take control of what they are doing in their household and energy is no different. There are many people who simply use energy as a service and the great thing about having a proper plan for distributed energy, whichever type of consumer you are you can get the benefits of renewable energy.
We do have an incredible resource in solar here in WA, even as I say that looking out a rain clouds, and everybody in WA understands the great opportunity people have in taking up rooftop solar. There are some people who want to use solar to have more control of their energy usage, while other people simply want to do it because it’s lower cost and its greener.
And what message does the DER Roadmap send to the solar businesses and industry in WA?
Solar is a big opportunity for WA, but beyond just rooftop solar, standalone power systems, batteries on the grid – there is a role for everything. And this roadmap allows us to have a competitive edge technically and also in regulation. In WA, we already have VPP [virtual power plant] trial in Onslo [in WA’s Northwest] and the recommendations out of the roadmap will see another trial in WA as well.
Speaking of VPPs, the report also recommends changes to what is calls the Access Code. What impact would that have?
We’re changing the regulatory framework here in WA, remembering we have a relatively small isolated grid so we can’t rely on any other resources [interstate] to support our system. So, we’re amending our regulations to recognize the participants in the market in a different way. The changes expands who can be a market participant, giving an opportunity for a VPP to be a market participant and providing it the opportunity to share in the revenue to supply services in the grid.
Well one very recent example of this type of development, is the deal announced just this week that real estate developer Nicheliving and energy blockchain provider Power Ledger. What do you make of such developments?
It should noted that the [WA state] government is also involved in one the Power Ledger project in White Gum Valley. We have amended the laws to allow microgrids and trading within that and the broader network we are trying to allow innovation, there are certainly lots of opportunities in that kind of environment and Power Ledger, as a WA company, is emerging as a world leader.
A reform of tariff structures has also a part of the DER Roadmap. What shape will that take? There may be fears within the solar industry that fixed tariffs may be increased, making solar less attractive.
We’ve trialed different tariffs in the remote part of the state [operated by Horizon Power]. WA is an enormous state and many customers don’t get their electricity supplied by the principal grid. In this trial, we introduced capacity charge tariffs and we will potentially trial a capacity charge in the SWIS. There can’t be cross subsidies between consumers, we need to make sure each consumer is bearing their own costs.
We are planning tariff trials here. In the state we have very large differences in the cost to service consumers with electricity. It is 24-times more expensive to provide electricity in the regions than in the metro, but a single rate of charge, so there are always embedded cross subsidies. Everybody who benefits from the network needs to contribute – but it wouldn’t be fair for regions to have them bear the full cost. People connected to the grid need to share all of the costs.
One of the great benefits from solar is very, very low wholesale electricity prices in the middle of the day. Given this, we have to encourage greater use of electricity in the middle of the day, and shave the peak use in the evenings. To the extent that we are able to shift energy demand from the evening to the day, it will benefit everybody. So we are looking at a trial that encourages good behavior and energy consumption during the day because it’s better for the system.
On the other hand, if a customer wants to go offgrid they are welcome to do so and we’re not making people stay connected. But what we find is that when people know the true cost of becoming fully disconnected from the grid, they realise the value they are getting from the grid.
One constraint that solar customers live with in the Western Power network is the 5 kWp limit on inverters that can be connected to the grid, for a residential PV system. Could this be relaxed through this DER Roadmap implementation?
Residential customers tend not to use more than 5 kWp [of electricity in their homes] so it is a sensible level. If people have larger systems than that but then they can’t enjoy the benefits of the other incentives provided, such as the large federal subsidy that is underpinned by the SRET [small-scale renewable energy target]. If you want to run a commercial business, there are many that install larger solar systems.
Part of the DER Roadmap is de-constraining the grid so that local constraints don’t stop customers from installing a solar system. There was a limit previously on [solar] systems of 3 kWp. That has been increased up to 5 kWp as we learned how to handle those grid constraints. But when we increase the number of installations from one-in-three homes, to two-in-three, we don’t want to displace potential customers.
What this roadmap is doing is that we all accept that the systems of the past don’t meet the technology of today, so we need a new technical and regulatory framework that allows everyone to participate in rooftop solar. This means that where there is congestion on individual feeders, we need a technical and administrative arrangement that removes those constraints.
One such initiative appears to be the so-called “community batteries”. Why is it that WA is going down that route rather than going more for VPP and more distributed storage?
People can install individual batteries if they want to and the DER roadmap sets out facilitate that. But there is a growing challenge of congestion on the distribution network and the community batteries can meet that challenge. There’s been a problem of overvoltage on individual feeders because of the amount of solar and community batteries support individual feeders or groups of feeders to de-constrain the grid on the distribution side.
And is there a genuine business case for the community batteries? Can they make money?
Those batteries are being funded partly by the regulated income of the distribution network and partly by innovative retail products. You’re asking, does it pencil out? It appears that there is a formula that can work. We have three community batteries installed so far and another nine planned for this year. There could be potentially hundreds on the way generating income from network support plus retail products.
Given you are looking to enable distributed solar, this will continue to destroy demand for Synergy [the state-government owned retailer and generator]. Is there a role for EVs in creating more demand, and couldn’t a whole-of-government approach, from government fleets to electric buses, play a role in creating some demand for Synergy?
Electric vehicles are not likely to deliver significant electrical demand; it only results in a 10% increase in demand if we electrify the entire fleet [in WA]. But there are a whole range of benefits of going electric, and that is outlined in the roadmap as well. We know EVs are coming, I have met with Mercedes and BMW in Germany and Hyundai in Korea, and it’s clear that in 10 years EV will be the norm all over the world.
If the Commonwealth Government wants to support that transition they are welcome to do so. The COAG Energy Council outlined the measures that could be used – and they are almost all actions by the Commonwealth.
Here in WA, we are trying to make sure the grid is ready for electric cars. At the distribution level there would be quite severe congestion and other constraints and we are planning to remove those congestion points. We are looking to see what tariff frameworks will work best to supply very high EV levels. This is going to happen, we don’t need to incentivize it. Governments have to accept that is the way things are going to move.
Does the DER roadmap and process enjoy bipartisan support?
I haven’t heard any comment from the opposition about the DER Roadmap. Recently there was a report published by a parliamentary committee on microgrids and stand-alone power systesm (SPS). We have provided SPS [systems] for our Wheatbelt customers. And it needs to be remembered that 51% percent of the Western Power distribution system supplies 3% of our customers and there is 24 times the cost to serve for Wheatbelt customers. So there is a big incentive. When SPS starting to be talked about four or five years ago farmers were complaining they were being offered a second rate service. That has completely turned around. At least for the National Party, which is ostensibly our regional party, they are strongly supportive of where the government is going in. From the Liberal Party, the formal opposition, there has been no comment. And I’ve seen nothing but universal support from industry.
So, there won’t be any refurbishments of coal generators, like [Synergy’s 1960’s coal generator] Muja AB in the future?
Go and have a look at my comments on Muja when I was the shadow energy minister.