Microgrids and more in WA’s distributed future

At a time of increasing technological change in the energy industry, the WA Parliament has released its final report examining WA’s Transition to a Distributed Energy Future.

This comprehensive report and its recommendations seek to complement reforms underway in the state to support the energy sector’s rapid transformation.

Western Australian environment

The National Electricity Market (NEM) interconnects Queensland, New South Wales, the Australian Capital Territory, Victoria, South Australia and Tasmania, and operates under the National Electricity Rules.

Western Australia (WA), however, is physically separated from the NEM and operates under a separate regulatory framework. This framework facilitates energy market reform tailored to WA’s specific circumstances.

In addition, the three electricity companies in WA (Western Power, Horizon Power, and Synergy) are all wholly owned by the State Government, distinct to most ownership structures found in the NEM.

Western Australian Inquiry

We’ve recently examined the AEMC’s proposed rule changes to enable distributors to supply customers using stand-alone power systems (SAPS) in the NEM.

SAPS, generally a combination of solar PV, batteries and a back-up generator, allow electricity services to be delivered to customers without a traditional grid connection. They can either supply a single customer or a town, commonly in regional and remote regions, where it can be more cost-effective to do so.

The WA Parliamentary Inquiry (the Inquiry) that led to the report was wide-ranging and examined the role of not only SAPS but also microgrids and associated technologies in the WA environment.

Microgrids are local energy grids that, unlike SAPS, are connected to the main electricity network. They can, however, disconnect from the traditional grid (“island mode”) and operate autonomously if required (for example, during power outages).

The benefits of associated technologies, such as grid-scale batteries, are also examined in the final report.

The Inquiry is complemented by the WA Government’s Energy Transformation Strategy. The Strategy, overseen by the Energy Transformation Taskforce, will be delivered under three workstreams:

  1. Whole of System Planning;
  2. Foundation Regulatory Frameworks; and
  3. Distributed Energy Resources.

The strategy’s work program has been established “to ensure the delivery of secure, reliable, sustainable and affordable electricity to Western Australians for years to come.” The Taskforce’s report on DER is understood to be with the WA Government and likely to be publicly released soon.

Technological change

The energy sector is undergoing transformational change. WA is grasping this challenge and leading the way with the largest deployment of SAPS in Australia.

Horizon Power, WA’s regional integrated generator, distributor and retailer and Western Power, which supplies the South West, have been introducing more renewable generation and storage into its isolated systems for many years. This includes several recent trials and projects to better manage renewables and reduce generation costs.

Following the success of its 2016 trial, where participants avoided an average of 71 hours of outages a year, Western Power is extending the deployment of SAPS to a further 57 sites throughout the South West Interconnected System. Not only will it provide reliability and power quality improvements, but it is more cost-effective than maintaining the traditional grid connection and reduces bushfire risks – findings supported by the Inquiry.

A microgrid solution is also being rolled out in Kalbarri, a popular tourism location in WA’s Mid West region. The objective is to increase reliability, acknowledging the impact that extended outages can have on the tourist town. Once completed, it will be a small-scale grid powered by renewable energy, which will continue to be connected to the grid by the existing rural feeder.

The Inquiry also found that, along with SAPS and microgrids, grid-scale batteries offer a range of benefits not only to individuals but the whole energy system. Benefits include:

  • enabling the storage of excess solar-generated electricity, helping consumers manage their consumption during peak periods;
  • deferral of expensive network infrastructure; and
  • improvement in distribution system operations.

WA is undertaking a ‘community battery’ trial, with the integration of a grid-scale battery into Western Power’s distribution network. The trial allows consumers to store excess electricity generated from their household solar and then draw on the stored energy during the afternoon/evening peak period. Not only do community batteries provide benefits to households, but they provide network-wide benefits in areas with high solar penetration by smoothing the flow of energy, reducing the likelihood of faults and in some cases deferring network upgrades.

Fit-for-purpose regulation is necessary

The rapid uptake of technologies such as battery storage, solar panels and electric cars are transforming our energy system.

The Inquiry’s Chair warned that a rigid and ultra-conservative approach to economic regulation would hinder WA’s ability to take full advantage of the benefits offered by these technologies.

Regulation that fosters, instead of hinders, innovation is essential to facilitate the integration of new technologies and maximise customer benefits. Acknowledging this is the first step. The next is amending the regulatory environment to reflect this.

With this in mind, the WA Parliament is considering an amendment to legislation to facilitate Western Power’s deployment of SAPS and distribution-connected storage devices (beyond the trials currently underway). The rationale is that deployment, where appropriate, will reduce network costs and improve the security and reliability of electricity supply to consumers.

The report also recommends changes to the regulatory framework to require the WA regulator to consider the need to facilitate innovation, research and the development of new technologies when approving five-year network determinations.

A key challenge of regulatory change is ensuring customer benefit is the priority.

It will be fascinating to see how the differences in the WA market influence the outcomes of its energy transformation.