PART 3 - REZ Open or Closed?
Now that we have outlined Australia’s current regional Renewable Energy Zone (REZ) approach and the nascent Urban Renewable Energy Zone (UREZ) opportunities, it makes sense to explore the two current approaches to UREZ.
A quick refresher: a REZ is a network area that combines renewable energy generation, storage, and transmission infrastructure to provide clean, reliable, and cost-effective electricity. Typical REZ projects have focused on large ‘grid-scale’ infrastructure in regional areas to replace failing coal-fired generation. The Urban REZ is emerging as a valuable complementary approach. It uses large numbers of small-scale Consumer Energy Resources (CERs) to provide power closer to where it is consumed. This is not just clean and cost-effective, it also saves on transmission costs.
The two main design philosophies when setting up an urban REZ, are to employ either a closed or open ecosystem.
The closed system, or ‘Walled Garden’ approach, relies on a Distribution Network Service Provider (DNSP) or Distribution System Operator (DSO) working with a small number of selected partners using their own proprietary controls and data, to manage power flows within the UREZ.
A DNSP may, for example, set up shared battery and solar equipment, from their chosen providers, that is controlled exclusively through a single gentailer. This increases the amount of local CER, but the benefits flow primarily to the small number of selected players, unless they decide to pass them on to those ‘outside the wall’.
An open system or ‘Open Garden’ approach, is an alternative where full transparency is provided. It is based on the DNSP/DSOs offering a consistent, open, digital platform to manage batteries and solar generation in the UREZ. This allows all players - retailers and equipment providers alike - to participate equally, with no special arrangements for a selected few. It enables integration with diverse technologies and systems, and encourages an ecosystem of energy services to benefit all consumers.
The ‘closed’ approach is simpler in the short term. By limiting the players to a small number, it’s easier to get the system components working together. However, this is very short-term thinking. If benefits are to flow to all consumers, the UREZ must be open to all equipment providers and all retailers. Breaking open the walled garden is necessary to achieve this objective.
The open system requires the use of standardised protocols and formats, which makes it easier for different components (e.g., solar panels, inverters, batteries) from various manufacturers to work together. These standards are already emerging from the work that DNSPs need to do to keep networks operating reliably. It’s a short step to take these emerging standards and make them work for value-adding consumer services.
The role of DNSPs is already evolving. There’s a realisation that a local operator must not just take responsibility for the electrical network, but must also operate the systems that control this network. This is the role of the DSO (Distribution Systems Operator). Still part of the DNSP world, but focused on the digital infrastructure needed for smooth and reliable network operations. In this evolving world, the DSO should support open systems that allow all players to interoperate seamlessly, including the ability for consumers to easily switch providers. Such an Open DSO role would bring about the drivers needed for continuous downward pressure on electricity prices for all consumers.
Solar Inverter
Overcoming barriers
One of the most costly barriers to leveraging the value of the rooftop solar revolution for current DNSPs or gentailers, is the differing specifications of operational equipment manufacturers (OEMs) that install the various DER or Distributed Energy Resources.
At present Australia has no integrated or common set of arrangements for data availability for access, sharing, or standards applicable to DER related devices, which goes well beyond the good progress being made with IEEE2030.5 / CSIP-AUS.
To software engineers like SwitchDin, it makes sense therefore to leverage Open Source Software or a single, standard Open Network Interface, or (ONI) as SwitchDin terms it. This enables the team to create an open national Application Programming Interface (API) with open standard based controls and data that all stakeholders can access and use. This will lower the barriers to entry, and encourage innovators to create new energy services for consumers’ benefit.
By providing an open digital infrastructure, aka ONI, sharing Consumer Energy Resources locally will be viable. At the same time it will provide a template for an Urban Renewable Energy Zone (UREZ) that can be deployed anywhere in Australia.
Open systems are essentially plug and play platforms e.g. the now universal mobile portability in the telecommunications industry, or in Financial Services. Think the NBN, or today’s Open Banking or Fin-Tech powered ecosystems. Or Australia’s Consumer Data Right (CDR) system which enables consumers to share data and receive more personalised, competitive and innovative services through APIs. As opposed to operating under a closed, siloed banking system.
SwitchDin initially proposes leveraging CSIP-AUS, to enable all CER types to be managed. This will dramatically reduce dependence on particular OEM specific control interfaces. Also the ONI interface will support accessibility and openness at all levels. That includes any retailer, Virtual Power Plant (VPP), or other stakeholder. And all developments will be fully open source, avoiding lock-ins to a single provider.
The kicker
The kicker for SwitchDin is the ability to expand the energy network and facilitate interoperability. Another value of using an open network interface is of course the greater flexibility it provides to adapt to and integrate new technologies as they come online. And as is continuously proven, openness inevitably fosters innovation and competition - and so drives down the cost of entry and the cost to serve.
In this way ONI meets SwitchDin’s primary goal - to create continuous downward pressure on pricing for all consumers.
Sydney city case study - the nuts and bolts
Recent research (Committee for Sydney, ARUP/ARCADIS - Sydney as Renewable Energy Zone) claims that 75% of Sydney energy needs could be met with rooftop solar and battery storage within the urban footprint. With little need to invest in any additional distribution network infrastructure.
It states that the main technology barrier to realising this in practice, is the ‘lack of a consistent, effective, and consumer-friendly way to share these resources’. As well the ability to incorporate them into the local electricity grid and preserve system security and stability.
Why an open network?
An open network can meet these challenges by being able to easily integrate into the grid, and by being applicable for all consumers.
Universal applicability comes in two main ways:
Firstly, ONI enables community CER resources to be easily shared. The added bonus is that it allows direct participation from consumers, including apartment dwellers, who would otherwise be unable to make use of CER.
Secondly, the benefits of well-integrated CER will be able to flow on to all consumers - CER owners or not - by reducing the infrastructure spend.
SwitchDin’s analysis shows that even households without rooftop solar panels or batteries like renters, or social housing tenants, will still be able to benefit from an open UREZ. And achieve power bill savings of at least $300 a year. Unfortunately other less ‘consumer friendly’ approaches are already being assertively marketed to customers so time is of the essence. See our next blog on batteries, VPPs etc.
By bringing together technology providers, network experts, infrastructure providers, and retailers to create the ONI interface specification and an open source reference implementation, SwitchDin will demonstrate how an open source UREZ digital platform will work. It will also provide a ‘digital space’ for retailers, VPPs, regulators and others to prove the value of the interface.
The result
An Open Network Interface with open source implementation, quality and potentially ‘real-time’ shareable data, and stakeholder collaboration, will transform the operation of both DERs and CERs on the distribution network, by providing benefits to the entire power system. Together they will improve the use of network capacity and renewable energy. They will likely defer network upgrades, and help avoid curtailment events. In turn these impacts will create sustained downward pressure on costs, enabling consumer bills (whether for C&I or individuals) to be reduced for all, even those who do not own CER themselves.
