Do we need to ‘Orchestrate’ customers/prosumers to achieve load flexibility?

To meet Australia’s climate targets, we need to decarbonise energy users as well as large scale energy supply. This will require rapid electrification of homes, businesses and transport. But this has barely begun! To achieve electrification of homes at scale within the next decade we need to rapidly scale up improvements in home energy efficiency and critically also load flexibility to reduce need for new grid investments by integrating large scale renewables to the supply mix and improving T&D asset utilisation.

?At present there are 2 prevailing visions of how this load flexibility could be achieved – 1. through ‘orchestrating’ the use of the energy investments of passive consumers, willing to hand over control of their PV and battery for incentive payments, or 2. through actively engaged consumers who have agency over their assets through being interested and involved in controlling their energy use to meet their energy services objectives.

?But neither option will meet the aspirations of most customers/prosumers, and neither will be able to deliver the scale of load flexibility required by the grid.

This article offers a 3rd option; utilising intelligent energy management systems (IEMS) to deliver load flexibility while meeting customer objectives, without requiring customers to actively participate unless they wish to. The corollary of this option is that electricity customers should have the right to have an (IEMS), PV incentives, and support to implement some flexibility (starting with hot water system controls and potentially access to community storage). ?

So, what do customers want?

Each residential customer has their own objectives from energy services which relates to their lifestyle and means. Considerable research is being conducted by RACE for 2030 with Monash University, SAPN and other partners to better understand these customer needs. From previous work, most customers want to be able to reduce their energy bills while maintaining/increasing comfort. They also want better control over, and reliability of, their energy services (without feeling they are being dictated to by energy suppliers). And many residents would also like to be environmentally friendly. AND they want to achieve all this without having to make changes to their lifestyle, and without requiring knowledge of/or interest in their load profiles, or their energy users and how to best control them. So, in summary they want more agency without spending precious discretionary time to achieve these objectives. Where they have PV (nearly 40% of homes), most customers will want to use as much of their PV as possible in the home (including charging thermal or battery storage when the home is not using as much as is being generated), while minimising the supply of surplus power (at low and sometimes negative/penalty rates) to the grid.? ?

Improved load flexibility can reduce customer electricity costs and accommodate more large scale renewables on the grid. What are the sources of this flexibility?

Homes offer substantial load flexibility which could be utilised to allow improved integration of variable renewable generation and improved utilisation of electricity networks.?

In an all-electric home, there is PV supplying energy from the roof via an inverter, and the home can import/export power from/to the grid. The intelligent home control system would have access to these sources of load flexibility:

• Thermal storage in the form of the storage tank in an electric hot water system, and in future, potentially also through storing refrigeration in a cold water or ice storage tank.
• Thermal inertia of the house (i.e. the ability to turn off an air conditioner and use the heat/cold stored in the building to maintain adequate comfort for a period (which requires a well insulated building and load controllable chiller).
• Smart charging of your EV so that charging occurs optimally when the sun is shining during the day whenever possible to best use the PV.
• In future EV’s will be able to supply power back to the home through V2H (and potentially also supply to the grid - V2G – to gain an extra revenue source).
• In some cases, there may be potential to ‘share’ the storage capacity of a ‘community’ battery, or even ‘sell’ surplus power to a neighbour.
• Home battery (which is likely to be significantly less economically attractive than V2H when readily available, and probably also community storage).

So, what is the best way to capture this flexibility?

The best way to achieve this load flexibility is a topic of some debate. There are 2 extreme schools of thought that dominate the discussion, and both are not of interest to the vast bulk of consumers.

1.???? On one hand, the electricity industry offers the construct which imagines the increasingly distributed energy system (with approaching 40% of homes having PV on roofs) of prosumers to be suited to central command and control – where customer’s generation and storage investments can be aggregated and artfully managed – or ‘orchestrated’ - top down by central system controllers in a ‘symphony’. And as a result, a growing cadre of aggregation businesses are popping up to manage participants in ‘virtual power plants’. Does this sound like an industry that hasn’t really accepted that things have fundamentally changed? But consumers have free will and are making their own investment and operating decisions. The model works on the assumption that consumers are passive (apart from signing a contract), and willing to give up control of their PV and battery. But SunWiz recently estimated that just?14% of Australia's home batteries are connected to?Virtual Power Plant?(VPP) programs, despite significant promotion and incentives in most cases (though retailers claim greater levels of participation).

?2.???? The other extreme case is the construct offered by some consumer advocacy groups – that of the educated and deeply engaged prosumer with full agency, tracking their loads on home monitoring tools and making educated and daily decisions about how they want to use, generate and store energy to achieve their own individual lifestyle and budget choices. These prosumers seek out supply options which provide the greatest incentives for managing their load (e.g. the Amber offer which provides wholesale energy price exposure for $19/month subscription), and understand that there are many loads that can be manipulated to manage quality of life and energy cost and make choices, manually or supported by a home energy management system (HEM) to control these loads. The reality is that both these extreme options are not attractive to most consumers, and provide sub-optimal results in terms of both customer and network operational outcomes compared to a 3rd emerging option:

This 3rd way is the path to happy net zero electricity consumers in an efficient low carbon grid

Imagine if there was an intelligent energy management system for homes which used AI to achieve the goldilocks balance of agency, outcomes and little effort. This system could learn your typical way of life over time and adjust to that. And further, if major changes were expected in this pattern from time to time e.g. some guests staying (so for example you will need a full hot water tank in the evening), or you are taking a trip to Canberra at 6AM tomorrow, that you could inform the system in simple English, and it would change operations accordingly.

Each electricity consumer should have access to such an IEMS that would allow you to set and achieve your overall objectives from energy services, and manage rooftop PV, energy storage, imports/exports of electricity and energy services on your behalf. It will use an optimisation algorithm to manage the assets you have invested in to minimise your energy costs (within boundaries set by you to meet your established objectives) by responding to the wholesale price of energy (and potentially the price for network services), in near real time. ?And further, if the system receives information on specific offers/benefits available from the grid, the system will evaluate if this is in your best interests, and could take action to save you money, either automatically or if you wish, would ask you if you would like to participate through your iPhone app. In this scenario, homeowners could utilise this technology to optimise their home energy systems to achieve the energy services they want at minimum cost without active engagement.

The Vital Role of Intelligent Home Energy Management Systems

These ‘Intelligent Energy Management Systems’ (‘IEMS’) are the key element required to make this model work. The technology is available, though all these features are not necessarily available together in a simple integrated form to meet customer needs in existing home energy management systems.

I contend that this approach using IEMS which have access to real time energy (and ideally also network) prices, offers a better way to achieve time-responsive customer electricity consumption compared to utility driven aggregated interventions. It could provide better outcomes in terms of acceptance, load management, and system resilience.

To scale up these models to impact millions of homes, there is a need for investment in improved business models and, go to market arrangements, optimisation algorithms and AI customer tools/interfaces, and ideally regulation on interoperability of all system elements to ensure easy access to plug and play solutions.

It should be noted that consumers will typically use these systems to optimise their own suite of supply, storage and demand options. If the prices they receive reflect the costs of the system at each time, then this will also broadly align across a population of homes to optimising grid loads. There will be more work needed to provide IEMS access to dynamic network pricing, but that is becoming more feasible. (And note that it does approach does not work well with having multiple providers/retailers to control different aspects of home load flexibility and sub-optimising outcomes for the consumer).

Finally, IEMS become almost essential for home owners with the introduction of bi-directional EV charging, as this offers significantly greater opportunity for load flexibility in the home (V2H) and services for the grid V2G, given the large size of EV batteries (now typically 70+ KWh (equivalent to 5-6 Powerwall 2 home batteries) with the ability to run a whole home for 3+ days).

Because of the potential impact I am keen to work with companies aiming to develop IEMS and bring them to market at scale. Please contact me at [email protected]