How can Virtual power plants make solar energy more attractive?

The Australian market is a fascinating case study for those who work in the photovoltaic sector and, at the same time, are interested in battery systems. Currently, there are more than 2.56 million photovoltaic installations in Australia, with a combined capacity of over 18.5 GW. In 2010 there were less than 100 thousand photovoltaic systems installed in the country.

This expansive increase in photovoltaic solutions is linked to several factors. Among them, the fact that many homes are located in remote areas, which makes access to transmission and distribution lines difficult and boosts the use of systems off-grid. Another factor is fires caused by natural causes, which end up damaging the structure of the electrical system from different regions of the country.

In Australia, fire is historic, is part of the regime of part of the Australian biome and can occur naturally, mainly due to lightning. In fact, part of the vegetation is adapted to fire – a situation similar to what we see in the Brazilian cerrado. This factor leads many Australians to invest in photovoltaic systems combined with storage to guarantee access to electrical energy.

Furthermore, the cost of batteries has fallen considerably in the country. According to research carried out by Mordor Intelligence, specialized in market studies, lithium-ion batteries are expected to register a CAGR (compound annual growth rate) of 22.58% in the period from 2020 to 2025.

According to research, the key factors driving the market are the emergence of new and exciting markets through electric vehicles It is energy storage systems for commercial and residential applications, falling lithium-ion battery prices and increased sales of consumer electronics.

Another factor that cannot be ignored and is vital for the expansion of solar energy, linked to the use of batteries in the country, are the federal government subsidies and some states in Australia.

How does the charging system work in Australia?

Just like Germany, Japan and California, Australia adopts the FIT system (feed-in tariff). The central idea of this system is to allow sale of excess energy produced by DG systems (distributed generation), especially photovoltaics.

This model is currently not adopted in Brazil. In our country we adopted the system net metering, a credit compensation scheme that allows the receipt of credits for surplus energy injected into the grid. These credits are later recovered by the consumer on their next electricity bills.

In the scheme of feed-in, on the other hand, you receive a value for the energy injected. Normally the amount paid for injected energy is higher than the electricity tariff, which acts as an incentive for the installation of photovoltaic solar energy systems. In other words, people earn money to generate electrical energy from photovoltaic systems.

The system feed-in It is generally focused on residential systems and limited to a power range, which means the system is not applicable to large power plants. In Australia the rules of feed-in They vary according to the region and the electricity distributor. And they vary over time too. Various schemes feed-in existed in the past and were later repealed.

In the beginning, it was important to encourage the use of photovoltaic systems, but over time these incentives no longer made sense or their maintenance proved to be unfeasible. Currently, in Australia the maximum powers of systems that can join the feed-in vary between 10 kW and 30 kW. In all cases, energy producers receive a defined value per kilowatt-hour (kWh) injected, with contracts that can last up to 20 years.

Federal government subsidies

Another factor that makes Australia different from other countries is the incentive model adopted by the federal government. “Australia has a renewable energy incentive model called Renewable Energy Certificate, or Renewable Energy Certificate (translation). It's something that Brazil doesn't have. This is part of a strategy called RDT (Renewable Energy Tag – Renewable Energy Targets”, explains Rodrigo Sauaia, co-founder and executive president of ABSOLAR (Brazilian Photovoltaic Solar Energy Association).

Still according to Sauaia, the renewable energy certificates They are part of the renewable energy targets and establish conditions, as if they were a valuation of renewable energy. These certificates, which show how much renewable energy a consumer generated with their photovoltaic system, can be remunerated in purchase and sale transactions of renewable securities.

According to Clean Energy Regulator (Clean Energy Regulator), the government body responsible for administering legislation that aims to reduce carbon emissions and increase the use of clean energy, since January 2011, RECs have been divided into types:

• STCs (small-scale technology certificates, small-scale technology certificates);
• LGCs (large-scale generation certificates, large-scale generation certificates).

Small-Scale Technology Certificates

These certificates are created for eligible renewable energy installations, including photovoltaics. An STC is like a discount coupon given to anyone who installs a solar system or any other small-scale renewable energy system.

But how does it work? In general, the installer handles the STCs for the consumer. These professionals calculate the STC discount for their client, who can, among other things, exchange their STCs for cash. There is the possibility for the consumer to manage their certificates themselves, however due to the complexity, in most cases, it is easier to let the installer take care of this.

And how are STCs calculated? Each MWh of renewable energy generated is eligible for one STC, with the number of STCs depending on the size of the system, the installation location and when the solar system was installed. The STC scheme is scheduled to be phased out by 2030.

Virtual power plants and remuneration for small generators with batteries

Another particularity of the Australian market is the VPPs (virtual power plants – virtual power plants). But how do they work? O Australian federal government succinctly clarifies that a VPP is a network made up of several energy generators distributed and operated as if they were a single larger plant.

In general, it is made up of photovoltaic generators – like residential solar energy systems with batteries. These solar and battery systems can be located in many neighborhoods and controlled centrally using WiFi technology and sophisticated software to charge or dispatch battery power.

Virtual power plant operators offer a variety of financial incentives and other benefits to households in exchange for joining a VPP. These incentives may include discounted solar and battery systems or rent-to-own plans, reward payments, lower electricity rates, backup and credits to your electricity bill each time your battery is used by your carrier during a VPP event.

But what is the purpose of a VPP? The main thing is to alleviate the load on the network where it is located. And how is this done?

The controller intelligently dispatches the energy generated by the individual units that make up the VPP. During periods of peak network consumption, the controller controls the charging or injection of energy into the small generator's batteries. In other words, during a VPP event, a generator can inject (sell) part of the electricity from its battery and/or charge it (buying electricity from the grid).

Currently in Australia there are several VPPs on the market. Among them, the Tesla Energy Plan, whose shareholders are the government of South Australia and the American company Tesla, owned by Elon Musk. To exemplify how VPPs work and their benefits, we can mention the case of VPP in South Australia. In October 2019, there was an unexpected interruption of the largest generating unit in the national electricity market, Kogan Creek, in Queensland.

On occasion, when the power system frequency fell immediately below the normal operating range, VPP South Australia detected this frequency variation and responded immediately to inject power from its affiliated generators into the system to assist in recovering optimum frequency levels. The initial success of VPP South Australia has demonstrated the benefits that consumers/generators (prosumers) can bring to the grid.

Australia is a reference in research and development

The Australian market is also reference when it comes to R&D (research and development), according to Rodrigo Sauaia. The executive is very familiar with the Australian and European markets.

“Australia has always been a reference in photovoltaic solar energy in the world and in the technical and academic universe of the sector. To give you an idea, Australian research, development and innovation were responsible for breaking world records in photovoltaic solar energy over the years, starting in the 1980s,” says the executive.

“Australian laboratories have had a series of exceptional performances in technology, and implemented innovations that have been brought to industry. Several of the developments that caused the price of solar photovoltaic energy to fall radically over the decades have their origin, or positive influence, on the development research that took place throughout this period in Australia”, he adds.