Cortexo and Our Energy are committed to action that results in the electricity system and market being able to meet the challenges and opportunities of accelerated electrification.
We’ve talked about having a plan to unlock the value of distributed energy resources (DER) and flexibility and what good progress towards having that plan might look like.
Our view is that the plan really needs to focus on the adoption of a flexibility-first requirement for network operation and asset management.
But, a flexibility-first approach will be most useful when flexibility is a feature of system and network operation and when flexibility services are easily exchanged. This article and next week’s one explore these two ideas further.
Operating instructions for the system and network need updating
Making flexibility a feature of system and network operation means updating the operating instructions.
The electricity system is a massive and complex machine – it stretches the length of the country, has millions of moving parts, operates in response to almost uncountable instructions each day, and delivers its outputs to about 2.2 million locations across the country. (Sidenote: this is the source of the oft-decried complexity of the electricity sector; it’s complex because it is.)
Like all machines, the electricity system has an operating manual and operating instructions.They tell you what the machine does and what not to do if you want to avoid it breaking or blowing up.
The operating manual was written in the late 1990s and is made up of things like the Electricity Industry Act, the Electricity Industry Participation Code, Electricity Act, Commerce Act and various regulations1.
The operating instructions – for the purpose of this conversation – define the operating envelopes for the safe, secure and reliable operation of the transmission network and of the high, medium and low voltage distribution networks.
Operating instructions for distribution networks are mostly outlined in connection policies of each distributor, taking account of technical and safety obligations in the Electricity Act, Electricity Safety Regulations and other legislation (note 1).
The instructions provide the technical and performance requirements (note 2) for operation of the network (by the network operator) and for use of the network (by parties connected to the network). These requirements (or operating envelope) are the basis for planning, forecasting and operating decisions by network operators and for the conditions they impose on network connection and network use.
Operating instructions have adapted as technology has improved
Once, watching Play School on the television involved physically turning a knob (using needle-nosed pliers if the knob had fallen off), twisting a dial, and perhaps carefully calibrating the coat hanger aerial.
Now, watching Play School involves pressing a couple of buttons on a remote control or somes swipes and taps on a mobile phone. No pliers required.
The electricity sector has seen similar progress. Once upon a time, substations had someone on site 24/7 ready to turn a knob and flick a (big) switch to make sure the lights stayed on (or avoid something blowing up).
Now, the same job is mostly done with computers and electronics.
This picture shows inside the Ward Street substation in Dunedin. The substation was upgraded in 2011, but Aurora Energy left some of the (disconnected) equipment which was installed in the late 1930’s to keep a link to the past.
The shift from manual operation to computer programmes and electronics changed network planning, forecasting and operating operating practices which fed through to changes to what people could connect to the network and how the network was used. The results have been improved customer service – more people could connect to and use the network – and improved reliability and quality of supply.
Further adaptation of operating instructions is needed
Further adaptation to the operating instructions, particularly for low voltage networks, is needed to explicitly accommodate the dynamic capability of DER for keeping network performance within the operating envelope.
The amount of distribution service which can be delivered in any one location depends on the hosting capacity of that part of the network. In simple terms, this is about the amount of generation (eg, solar) or consumption (eg, EVs) that can be connected to a network and used without diminishing the reliability or voltage quality experienced by other consumers (note 3).
The underlying premise of network planning, forecasting and operating decisions has been the quite predictable usage patterns of household and business power consumption.
But, things like solar, EVs, batteries and accelerated electrification will fundamentally alter these usage patterns and could easily ‘use up’ any surplus hosting capacity, particularly in the low voltage parts of our networks. Without action, this will lead to reduced reliability and quality as different patterns of network use cause performance to go outside current operating envelopes.
Simplifying things a lot, the choices available to a distributor for managing pressure on the hosting capacity of the network are one or more of these four:
1. offer a lower standard of service with more frequent outages or lower quality of supply (creating problems for performance of household and commercial electrical equipment);
2. limit use of the network by refusing to connect more generation or consumption or by rationing use (eg, using volt response capability of solar inverters to automatically stop export when the nearby network performance goes outside the operating envelope);
3. increase hosting capacity by upgrading network infrastructure like the transformers, cables or conductors;
4. do more with what is there by using the capability of DER on the network to provide flexibility services as and when required to keep the network within the operating envelope.
Networks have needed to be self-reliant
Networks have relied on their own management of their network and the limited supply-side tools available to keep inside their operating envelope.
Relying on outside help to keep things within the operating envelope was not necessary when network use was predictable and not practicable when communication and operation was analogue and manual.
Choices 1 to 3 above have been the go-to options for keeping the lights on in these circumstances. The choice in any given situation is determined by regulatory settings a network must abide by specifying the total investment allowed in a specific period (normally 5 years) and the associated reliability and quality thresholds that must be achieved.
As an aside, the remote control by distributors of household hot water heating (commonly referred to as ripple control) is a supply-side network management tool. The network operator has complete control of when the hot water cylinder is turned off and on again. The ripple control tool has worked well, but it’s not fit-for-purpose in the future. It’s analog, can’t be used in a granular or localised way, and it is certainly not a service relying on the flexibility of a household’s energy use.
Network self-reliance is not sustainable as DER becomes more prevalent
Nowadays, and increasingly into the future, flexibility from DER (choice 4 above) will be a necessary network management tool as electrification and uptake of DER accelerates.
Using flexibility from DER means asset management and network operation will necessarily become less self-reliant and instead rely more and more on outside help from DER owners and operators.
The alternative is a combination of increased network costs (building more network would increase network charges by orders of magnitude), not meeting reliability and quality expectations, and really annoying people by telling them they cannot connect to and use the network. In other words, nothing that anybody wants.
Providing an unconstrained network everywhere and all the time by building more network would be expensive. We know that households and businesses in several Australian states have (over)paid for over-investment in networks caused mostly by excessive reliability standards (ie, network operators were required to invest to avoid unconstrained networks).
Fortunately, flexibility is becoming a practicable option because digitalisation gives equipment connected to and using networks the ability to receive, send and respond to instructions without any human involvement. Direct control of the operation of the resource is not needed (old habits and comfortable socks can be difficult to throw out, though).
Shifting from self-reliance to collaboration
The necessary change to the operating instructions is to embed a shift from ‘set-and-forget’ to dynamic operation which uses DER to do more with the same amount of network. The shift is not completely into the unknown because it extends on how sub-transmission and transmission parts of the power system are largely managed today.
There are a few things to think about though:
– How to get visibility of real-time network performance to know whether things are inside the operating envelope?
– How to get DER owners to offer their flexibility?
– What is flexibility actually?
– How to talk to that DER to ask it to help out?
– How can each DER owner choose between continuing to use the network as they were or altering their activity due to the impact on the operating envelope?
– What value to put on access to and use of flexibility?
– When would flexibility be used? How to decide between relying on outside help and building more network, particularly while things are not really predictable?
This DER Roadmap published by the Western Australian Energy Transformation Taskforce in December 2019 gives an example of how these questions are being answered elsewhere.
But, this will be no overnight change. And, there will be bumps along the way as experience is gained using flexibility to avoid network upgrades.
Embrace digitalisation (or else)
Making flexibility a feature of system and network operation is really about embracing digitalisation of the electricity sector.
Digitalisation means converting information into a digital and computer-readable format. This allows all types of information in all types of formats to be processed, intermingled, stored, shared and transmitted with magnitudes less fuss, bother or hassle (and, yes, less cost).
The electricity sector is data and information rich. But digitalisation has not been embraced. Lots of data is analogue. This means information is trapped in siloes and is either underutilised or unused completely.
Planning, forecasting and operating decisions are being made without all the available insight and evidence. There can be no doubt that households and businesses are bearing unnecessary costs as a consequence – costs that are on track to only increase given the required transition ahead and could easily mostly fall on those least able to afford them.
Take the recent grid emergency, which occurred when a shortfall in generation resulted in load-shedding affecting about 35,000 households and businesses. The requests by the System Operator to distributors to reduce load were communicated via emailed PDF files and phone calls. We can, however, report that no fax machines were unduly harmed in the process, though.
Digitalisation would have allowed machine-to-machine communication between System Operator and network operators’ systems and, at least, reduced the risk of unnecessary load shedding.
Traditional network operators’ systems (eg, SCADA) are often, for very good reason, isolated from the real world of connectivity to a variety of new sensors. This isolation will be (and may already be) difficult to justify. This is because connectivity – being able to see what is happening on the network at any time and place, and respond – will be essential to manage networks as more DER connects to and uses our networks.
Millions of DER on our networks makes digitalisation a must do
Decarbonisation will put millions of DER – EVs, solar, battery storage – on our distribution networks. These will need to be seamlessly integrated into the networks, electricity system and market in a way that gives power (and value) to the people who own the DER. This means network operators adapting too.
Digitalisation must be at the heart of this integration to make sure network operators (and others) have the information they need to balance, second-by-second, the electricity and capacity required to keep the lights on, and to make sure that people and businesses have the information they need to make their electrification decisions and to participate in the electricity market.
The United Kingdom’s Digitalising our energy system for net zero: strategy and action plan 2021 published in July 2021 does a good job of describing the significant benefits of a digitalised energy system for decarbonisation, the economy and consumers.
Making flexibility a feature of network and system operation means embracing digitalisation
Updates to the operating instructions and digitalisation are a package deal.
Adapting the instructions for system and network operation, particularly for low voltage networks, is mostly about updating planning, forecasting and operating decision-making practices.
These decision-making practices cannot be changed however without digitalisation to provide data and information about what is happening on the network at any time and place. This level of visibility requires a digital approach to hardware as well as software and the use of digital communication standards (such as openADR).
The true value of the millions of DER that will be connected to our networks as electrification happens can only be harnessed with digitalisation of the electricity system and by making sure information is available to:
– the network operator;
– the people owning the DER; and
– to those supplying electricity services.
Digitalisation is pretty pointless if the information is not used for the planning, forecasting and operating decisions of everyone – particularly distributors and DER owners – across the electricity supply chain.
Not embracing digitalisation and not updating the operating instructions will put the brakes on electrification and make decarbonisation slower, less flexible and reliable, and more expensive than it needs to be.
Next time
To be continued…in the penultimate article of this series, we will talk about how an organised flexibility market requires, by definition, organisation.
Notes:
Note 1: Operating instructions for the transmission network are mostly outlined in the Code. Parts 7, 8 and 9 specify requirements relating to system operation, common quality and security of supply, including the performance obligations of parties connected to the transmission network.
Note 2: For example, the Electricity (Safety) Regulations 2010 require that the supply of electricity to installations operating at other than standard low voltage, unless otherwise agreed between the electricity retailer and the customer, and except for momentary fluctuations, must be maintained within 6% of the agreed supply voltage.
Note 3: This definition of hosting capacity is drawn from the Electricity Authority Integrating hosting capacity into small-scale distributed generation connections consultation paper, with the addition of the underlined text and used.
Cortexo and Our Energy are committed to action that results in the electricity system and market being able to meet the challenges and opportunities of accelerated electrification.
We want to help lead the conversation about how, when and what the electricity sector needs to do to accelerate electrification and to show the way by trying things out.
To see what Our Energy and Cortexo are doing together to accelerate electrification you can have a look at this blog entry.
