As the legion of owners of distributed energy resources grows the cosy market for daytime supply will be overturned, writes Brian Innes.
There are many players in the Australian energy industry who are jostling to establish their place in the low emissions grid of the future. In my previous article I described the energy sector Battle for the Night, the competition between coal (the Night King) and wind (the Night’s Watch) energy suppliers to establish themselves as the reigning base load power supplier at night. Here I continue my Game of Thrones analogy and outline the Battle for the Day, but first a quick recap.
The Battle for the Night will be won by the lowest marginal cost energy source. As installed capacity grows towards the market minimums, wind farms will provide most of our energy needs at night and around 40% of our total energy requirements. Wind power sources will be supported by existing investments in dispatchable energy sources (dragons) and the coal industry and lobbyists (Night King and his Army of the Dead) will slowly get pushed out of the night time market.
The Battle for the Day will occur as energy players fight to service our daytime energy requirements. This can be compared to the fight to reign over Kings Landing, the capital of the seven kingdoms in the saga.
Traditionally, our daytime energy requirements have been sought-after for energy providers because of high prices and high demand. It is full of many different energy traders who aim to maximise their profits by increasing volume sent out at optimum times. The night time base load providers have, to date, enjoyed a safe profit-making haven as coal energy providers have been keeping out of the bidding battle and focusing on securing the high prices of the daytime.
However, coal energy providers will soon engage in this battle as solar energy providers start to reduce the ability for base load to run. The NEM currently has 6GW of solar rooftop PV installed, gigawatts of large-scale PV projects in development and the rooftop capacity to install another 50GW. Australian Energy Market Operator (AEMO) forecasts are indicting that market minimums may even shift to a daytime minimum driven by behind-the-meter PV installation. If this occurs, the daytime battle will start to resemble that of the night with most generation ceasing to exist and only the lowest marginal cost surviving.
Strategy and storage
The Battle for the Day will be influenced by dynamics including the weather, market price rules and network stability constraints. The combination of these dynamics will ultimately impact which players will dominate. The grid will need to be able to balance energy fluctuations and will naturally see generation waves due to weather changes. Essentially this means even if the sun is out, it does not necessarily mean that homeowners can sell their solar energy back to the grid as it will be akin to trying to sell water to your neighbour in a flood.
The winners in this battle will be those with the best ability to store and manage power. Homeowners’ and businesses’ (the Free Folk) ability to optimise their power by controlling loads (pushing energy to pools, hot water systems, air-conditioning and by charging electric vehicles, etc) and storing power in batteries, gives them the ultimate advantage. The use of rooftop PV and battery systems will eventually grow well in excess of the daytime market minimums, capturing Kings Landing and delivering PV output to meet peaks when pricing dictates and servicing internal loads/batteries when it doesn’t. The Free Folk’s armada of home-based batteries will also store excess wind energy at night and provide further distributed energy sources during the night.
This will push backers of large-scale power projects, including investment bankers, to recruit the Army of the Dead to try and protect their stranded investments and hold on to Kings Landing. The politics will get interesting as the Free Folk vote, and there are a lot of them.
In the next five years we’ll see a surge of homeowners and businesses take up PV and batteries. These systems will make them greater than 90% self-sufficient and give them the ability to participate in distributed energy storage systems to provide reliable and clean power around the clock, paving the path to a sustainable and greener future.