DER INTEGRATION ROADMAP AND WORKPLAN - ENERGY SECURITY BOARD D - COAG Energy Council
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D
ENERGY SECURITY BOARD
DER INTEGRATION
ROADMAP AND WORKPLAN
SEPTEMBER 2020
Dr Kerry Schott AO Independent Chair Energy Security Board David Swift Independent Deputy Chair Energy Security Board Clare Savage Chair Australian Energy Regulator Merryn York Chair (Acting) Australian Energy Market Commission Audrey Zibelman CEO and Managing Director Australian Energy Market Operator
Contents
1 Purpose and overview ...........................................................................................4
2 Vision and outcomes for DER integration ..........................................................5
Outcome 1: Support a secure and reliable electricity system ............................................. 5
Outcome 2: To support improved distribution network management ................................. 6
Outcome 3: To unlock the value of DER services .............................................................. 6
2. Dimensions of DER integration ............................................................................7
Technical integration .......................................................................................................... 7
Regulatory integration ...................................................................................................... 10
Market integration ............................................................................................................ 11
3 Pathway to DER Integration................................................................................14
By the end of 2020 ........................................................................................................... 14
By the end of 2021 ........................................................................................................... 15
By the end of 2022 ........................................................................................................... 16
By the end of 2025 ........................................................................................................... 17
4 Road to 2025 and beyond ...................................................................................18
1 Purpose and overview
Distributed Energy Resources (DER) are already an important part of the Australian electricity system and
will be even more significant into the future. By 2030, the Australian Energy Market Operator (AEMO)
expects approximately 50 per cent of consumers to have either solar PV or controllable load; and at times
during the day distributed generation may constitute up to 90 per cent of the load across the National
Electricity Market (NEM). Increasingly as variable renewable energy begins to dominate the transmission
supply mix, DER could be used to provide services such as ramping, essential system services (ESS) and
reserves to ensure the system operates safely, reliably and securely.
The ESB’s objective is to optimise the benefits of DER for all electricity system users, regardless of
whether they own DER or not. The potential benefits of efficient integration DER are substantial and the
timely development of supportive technical standards and requirements, regulations, and market design
are essential.
In contrast, a system that does not provide consumers with choice or reward supportive behaviours could
drive up costs. Electric vehicles could add to peak demand instead of smoothing it, zero marginal cost solar
generation could be inefficiently constrained, prices could become more volatile instead of less, and without
regulation consumers may miss out on value created by their DER.
This Roadmap sets out how the ESB’s vision for DER integration and connects to key outcomes: a secure
and reliable system, improved distribution network management and the optimal sale of DER services. This
roadmap lays a pathway for technical, regulatory and market reforms. The ESB’s vision for DER integration
is focused on consumer outcomes, enabled by effective distribution network planning and investment, and
secure management of the power system.
A coordinated approach to the technical, regulatory and market reforms will be the difference between a
high cost, piecemeal integration and a lower cost, phased integration that can meet both consumer
expectations, network requirements and power system needs.
Having regard to the work program identified in the 2019 DER Integration Work Plan and possible areas for
future work, this document ties together, as clearly as possible within a rapidly changing system, how the
ESB envisages the future for DER integration will unfold and what needs to be done to ensure the benefits
of DER are unlocked in a timely manner. For each of the critical path activities, it outlines which
organisation(s), inside and outside the ESB are leading current work.
The ESB is working hard in collaboration with a number of organisations to identify and address current
and future challenges and opportunities associated with efficiently DER into the electricity system. The
ESB, in partnership with the market bodies, has an important role to play in leading and collaborating with
industry to ensure these reforms are coordinated and meet the overall vision for DER integration. The ESB
has been working on how to successfully integrate DER into the electricity system for the last eighteen
months in partnership with the other market bodies and stakeholders. This Roadmap will be a foundational
document for the integration of DER leading into and beyond the Post 2025 market redesign. It will
continue to evolve, just as the technology behind DER does.
This Roadmap is being released coincidentally with the ESB’s post-2025 consultation paper which covers
wide-reaching market reforms to meet the needs of Australia’s changing energy system. It is important to
note that the post 2025 market design work will go beyond what is in this document and is likely to have
further implications for regulation and technical issues.
4
2 Vision and outcomes for DER integration
The DER integration roadmap outlines the relationship between the vision, desired outcomes,
the dimensions and the priority work areas to support those outcomes. The roadmap is summarised by the
figure below:
Figure 1. ESB DER Integration Roadmap
The ESB’s objective is to optimise the benefits of DER for all electricity system users. This objective is
achieved when DER is efficiently integrated into the electricity system.
For DER owners, the efficient integration of DER would mean they can optimise the return on their
investment through the operation of their DER. This could range from using their DER for electricity bill
reductions, to access and participate in the growing number of new energy services markets or other DER
service procurement mechanisms, or, most likely, a combination of these.
Efficient DER integration will also provide significant benefits to non-DER owners and all system
users through lower total system costs. Total system costs will be lower where DER drives down energy
costs, for example, by providing near zero marginal cost energy as well as essential system services in
competition with traditional providers. Devices or software that enable load flexibility could help deliver
more efficient use of existing network infrastructure and help integrate more variable renewable energy into
the market and system. Effectively integrated DER can also provide services that support the reliability and
security of the system, helping AEMO and network businesses maintain a reliable and secure system.
In order to achieve the objective, DER integration needs to achieve the following three outcomes.
Outcome 1: Support a secure and reliable electricity system
Any future electricity system, regardless of its generation mix, will need to continue to provide secure and
reliable electricity supply to customers. As DER penetration increases, it can impact the way that the
electricity supply system behaves and provide opportunities to support system security and reliability.
System operation capability needs to be reviewed and renewed for a high DER environment, as well as
the effective technical integration of DER hardware and software into the electricity system.
5
Outcome 2: To support improved distribution network management
If effectively and efficiently integrated, DER should support improved distribution network operation and
improve network utilisation. To deliver this outcome, a number of technical and regulatory changes are
needed. In particular, the economic regulatory framework governing them need to include drivers for the
efficient and effective integration of DER into distribution networks. This include efficient
investment by DNSPs to support the deployment of DER.
Outcome 3: To unlock the value of DER services
This outcome requires the efficient integration of DER into current and future wholesale, FCAS/essential
system services and network services procurement markets. ‘Market’ integration is used here to cover
any form of procurement of services that can be provided by DER, including through regulated contracts
and off-market transactions. This is done with the aim of unlocking value to both the owners of DER and
the wider market.
6
2. Dimensions of DER integration
The outcomes discussed in Chapter 1 of this Roadmap can be achieved through a combination of
technical, regulatory and market actions. The best solution depends on the issues or challenges presented.
Conceptually, engineering issues are usually best addressed through technical responses where these are
straight-forward (e.g. standards, controls and settings). Economic challenges due to the changing costs of
maintaining system security or reliability may need market solutions. For regulation and market design,
issues of consumer trust and non-financial engagement require social science understanding.
Figure 2. Dimensions of DER integration
Technical integration
Technical integration of DER is fundamental and foundational. Electricity systems were not designed with
DER in mind and there are increasing technical challenges and opportunities arising as the infrastructure
adapts to multi-way flows of energy. Increased visibility is needed by both DNSPs and AEMO to support
management and planning of the system. AEMO has a major focus on technical integration and has
documented the detailed challenges in a number of reports.
The scope of technical integration includes device, interoperability, communication and cybersecurity
standards, the governance of DER technical of standards and enabling changes to DNSP systems such as
the development of standardised approaches to dynamic operating envelopes (which will expand DER
exports by time of day and location within the technical limits of distribution networks).
DER technical standards need to support system security, distribution network operation and also the
ability for DER owners to be rewarded for providing DER services.
System security and operations
Figure 3 below shows the various timescales at which DER technical integration is required for AEMO to
ensure power system security.
The most immediate challenge for system security relating to DER is the way in which the resources
respond during system disturbances (‘fault ride-through’). This can be addressed through device
standards, i.e. updates to AS4777 for inverters. This work to develop initial minimum technical standards
is underway through AEMO supported by a Distributed Energy Integration Program (DEIP) workstream of
stakeholders and is high priority for AEMO.
7
The response of inverter-based systems to disturbances needs to be reviewed in case there is a need to
replace devices without sufficient ride-through capabilities (i.e. pre 2016 inverters, part of household solar
PV systems). AEMO continues to review these issues and will propose further changes if needed.
Figure 3. AEMO’s timescales for power system operation, applicable to DER
In addition, standards are required for industry wide interoperability/communication and
cybersecurity. Again, these are being developed by AEMO in collaboration with a DEIP working group
and the Commonwealth Government respectively.
Future standard setting needs to be done in a coordinated, agile, efficient and effective manner. To this
end, the ESB has proposed the creation of a DER Standards Governance Committee to oversee the
development of DER technical standards. This is expected to be in place mid-late 2021 and will set a vision
and a workplan for future technical standards.
To ensure a secure system there also needs to be a review of system operational capability in a high DER
environment. This drives the need to review load models, emergency schemes such as under frequency
load shedding and blackstart capability – all of which are impacted by increasing amounts of DER in the
system.
Changing shape of the supply/demand curve
Due to the highly correlated behaviour of solar PV during the day, there are concerns about the potential
for negative minimum demand in the middle of the day and in some regions of the Australian electricity
system. Negative minimum demand makes it challenging for AEMO to manage system disturbances. This
is being addressed in South Australia through interim network operational measures in the short-term; with
load shifting and battery take-up incentivised in the short to medium term; and will need to be taken into
account in the post-2025 market design for the longer term. AEMO has recommended actions to address
minimum demand in its Renewable Integration Study. These include new standards and processes to
enable emergency curtailment for new PV installations in SA (and potentially other NEM
regions). Jurisdictional instruments have been proposed to address the issue in SA in the short term.
Increased ramp rates around sunset are also an operational issue for AEMO. There are a number
of actions listed in the Renewable Integration Study to assist AEMO with ramping, such as trialling and
implementing a ramping forecast and classification prototype. While ramping is a technical issue, tariff
reform is a key market reform for addressing this challenge and is underway through DNSPs. It could also
be addressed through a range of technical, regulatory and market-based measures including greater
demand response/load shifting (e.g. pool pumps and hot water systems), incentives for EV charging and
discharging, greater battery use and more efficient appliances. This is one example of the interactions
between the different dimensions of DER integration. Successful integration of DER will require technical
regulatory and market solutions and will need to be carefully deigned to ensure investment required by
DER owners and costs to all consumers is minimised.
Distribution network operations
Distribution businesses in turn will need to manage their networks more dynamically to understand,
manage for and optimise the access to and potential network use of DER.
8
This means developing systems in place to provide visibility of DER, communication and interoperability
standards and protocols, together with the development of dynamic ‘operating envelopes’ to expand the
access of DER to the grid. Required capabilities identified by the Open Energy Networks project jointly
undertaken by the ENA and AEMO under these topics are:
• DNSPs defining network visibility requirements and network export constraints:
o Define DNSP requirements for increased network visibility and development of more
accurate LV models
o Identify and communicate network constraints to maintain network operations within
required parameters (operating envelopes)
• Establish an iterative and targeted approach for the timing of investments required to provide
network visibility to support the optimal levels of safe, secure and reliable access for DER.
o Defining common communication requirements for operating envelopes:
o Define common protocols for operating envelope communication
• Establish Australian standards and/or guidelines to support the establishment of operating
envelopes
o Define common data access permissions
• Supporting development of an industry guideline for operating envelopes.
These activities are largely underway through numerous projects and trials, and energy market institutions
are looking to assist with these processes where appropriate.
Improving LV network visibility is a critical path action recognised and being progressed by DNSPs and
investigated in the ESB’s energy data strategy. DNSPs are undertaking different approaches to improving
visibility of their LV networks depending on their circumstances. For example, in Victoria all DNSPs have
visibility through smart meter data. In South Australia, SAPN has modelled its network by feeder type and
hosting capacity based on 14 standard types and is also purchasing data from third party providers.
Communication and interoperability standards and protocols will enable aggregators and retailers (and in
some cases DNSPs and AEMO) to communicate with DER devices and software. The standardisation of
architecture for this communication is a complex task. Dynamic operating envelopes are already being
trialled. SAPN’s trial system sends signals about the forecast availability of the network for DER exports.
SAPN’s system, currently being developed through trials, aims to set 5 minute ‘operating envelopes’ to
DER 24 hours in advance. This would be far more beneficial to DER owners than static limits or constraints
because it enables greater optimisation of DER services. The ESB is working with ARENA on how to
support the nationally consistent uptake of operating envelopes across DNSPs and further work on this will
emerge over the coming years.
Coordinating transmission level planning and forecasting with distribution level planning will also
be needed. DER will have an increasing impact up to the transmission level, impacting energy flows in both
directions. Therefore, ensuring that forecasting and planning uses the same assumptions and forecasts is
vital. Ideally, network planning will be nested and interactive, with aggregated distribution level outcomes to
be considered in system planning tools such as the Integrated System Plan. Integrated network planning is
underway in California and it is important that we rapidly consider how this could be better enabled in the
NEM. This is in scope for the DER Steering Committee.
Critical path activities for technical integration therefore are:
• DER technical standards in place
• Review system operational tools for high DER environment
• Governance arrangements for DER technical standards
• Improved DNSP systems to integrate DER, including:
o Improved Low Voltage network and connection point visibility
9o Implementation of dynamic operating envelopes.
• Coordinating transmission and distribution planning with respect to DER.
Regulatory integration
Regulatory integration is primarily about updating the rules and regulations to support the changing
consumer, communications and technology landscape. The National Electricity Rules (NER) were not
written with DER in mind and regulatory reform is needed to align responsibilities and incentives for DER
integration. Regulatory reform could also cover how DER should be taken into account in DNSP and TNSP
planning.
Integrating DER will increasingly become core to DNSPs’ operations, and their financial rewards will need
to reflect this responsibility. There’s also the potential for DER to be used to provide network services and
so lower costs for all energy system users.
As mentioned above, improved network visibility is a key step to distribution network operations in a high
DER environment. There are a variety of changes needed to improve network and system operation to
incorporate DER. These may or may not require regulatory changes; some changes may be able to be
undertaken within the existing DNSP rules and revenue regulation. In the short term, the Australian Energy
Regulator is looking to provide guidance on expenditure for DER integration through a guideline and a
standardised ‘Value of DER’ method for DNSPs to use in their revenue proposals.
As DER adoption increases, it will create new challenges for the networks – much the same as increasing
load has for the last century. The regulatory models, and DNSP systems will need to adapt to ensure that
the move to a bi-direction grid is managed to deliver the best possible outcomes for all consumers.
DNSPs’ responsibility for DER integration needs to be clarified and strengthened as a foundational
action. Then there’s a need to ensure associated changes to revenue regulation to support these
responsibilities.
Three rule changes have resulted from the DEIP Access and Pricing work program. Three rule changes
have resulted from the DEIP Access and Pricing work program. The proposals focus on three key areas:
1. Updating the regulatory framework to reflect the community expectation for DNSPs to efficiently
provide export services to support DER.
2. Promoting incentives for efficient investment in, and operation and use of, export services.
3. Enabling export charges as a pricing tool to: send efficient signals for future expenditure associated
with export services, reward customers for actions that better utilise the network or improve
network operations and allocate costs in a fair and efficient way.
This includes a proposal for new planning around DER integration for DNSPs which goes to the regulatory
reform needed to assist the joint incorporation of DER into distribution and transmission planning.
This is both a technical and regulatory integration critical path activity.
AEMC will consider updating the NER and National Energy Retail Rules (NERR) to take into account of the
evolving role of distribution businesses, especially for DER integration. This includes whether obligations
need to be established in the rules to support DNSPs in providing access to and optimising existing, or
investing in additional, DER hosting capacity and associated remuneration changes. This rule change
process is at the heart of the critical path action needed for regulatory integration of DER.
Ongoing work on tariff reform is also relevant here. This is an ongoing progress through trials and annual
tariff structure statements. The AER is continuing to look for ways to support the acceleration of cost-
reflective tariffs.
DER providing network services
DER can be called on to provide a range of network services and can also be constrained by network
limits. The sorts of ‘non-network alternatives’ DER can provide include:
10• Network extension (deferral)
• Network augmentation (deferral)
• Network replacement (deferral and de-rating)
• Network operation – including voltage management, power factor management and emergency
response
• Managing bushfire risk from lines (including allowing areas to stay powered even if a line has to be
de-energised)
• Resilience.
The use of DER could substitute for traditional capex spend or for network operations/opex. It is likely there
will be a progression over time from more static procurement of DER in place of capex to more dynamic
procurement of DER. This is likely to be supported by increased levels of DNSP LV system visibility and
higher levels of DER penetration.
In future, it also may be possible for consumers to trade their allocations of network capacity. Capacity
trading is the idea that any premises connected to a network could chose to use or trade the network
capacity they do not use. This could operate using static or dynamic operating envelopes to determine
capacity. However, this concept appears to be some time in the future and operating envelopes are a
critical path action to enable this future possibility.
Opportunities for lower cost network service delivery through stand-alone power systems and
microgrids
There’s also the possibility of changing network service delivery models. The falling cost of PV and
batteries will increasingly create opportunities to provide electricity supply through standalone power
systems (SAPS) and islandable microgrids in remote and regional parts of the NEM at lower cost than
traditional supply. This is what Western Power calls ‘modular networks’: underground in high density areas,
above ground in suburban settings and SAPs/microgrids in low density areas. In the NEM, regulatory
changes are underway to enable DNSPs to provide SAPs for consumers where it is cost effective to do so.
Further regulatory change to revenue regulation to support ‘modular networks’ ie different network
service delivery models, especially for managing any resulting stranded assets may be needed in the
medium term.
In the medium term, a network revenue regulation model where networks are remunerated on the basis
and the quality of these services of the services they provide (as opposed to capex and opex) could be
considered. The AEMC conducts the Electricity Network Economic Regulatory Framework (ENERF) review
annually to consider whether the economic regulatory framework for electricity networks is sufficiently
robust and flexible to continue to support the long-term interests of consumers with increasing DER. In
undertaking this work the AEMC will consider the interaction of competitive markets with those of regulated
monopolies. This is an important consideration for our future market design.
Critical path activities in relation to regulatory integration:
• Improving DNSP systems to integrate DER, including
o Incorporate DER into Transmission and Distribution planning
o Consideration of modular networks
• Enhance DNSP requirements for DER integration and network revenue regulation to optimise use
of DER
• Accelerate tariff reform and consider future pricing.
Market integration
Tariff and pricing reform is critical for DER market integration and there are further elements to consider.
Prices that reflect the supply/demand balance, and tariffs that signal network constraints are important,
11especially for shifting load into the middle of the day when solar generation is high. In the longer term,
machine-machine tariffs may automatically optimise the use of DER across network services, wholesale
and essential system services markets.
The market integration of DER encompasses the potential for DER to provide services into the wholesale
and essential system services markets as well competing with more traditional network solutions at
distribution level (which is both a regulatory and market design opportunity).
The ESB developed agreed principles for DER integration at a workshop in August 2019 that DER will be
valued and regulated equivalently to large-scale resources, including valuing supply and demand
equivalently and valuing DER by time and location. These principles will be tested and further developed in
the Post-2025 market design process.
Wholesale and essential system services markets
DER can provide balancing for the wholesale market and essential system services markets, including
providing market reserves. These are emerging possibilities, most likely to be most efficiently undertaken
through aggregators which combine services from multiple DER.
To do so requires clear communications, data and interoperability standards and protocols. There are
significant challenges managing the communications, computation and data-access challenges of millions
of devices operating at system and market timescales of seconds to minutes. Likewise, enabling adequate
interoperability between different manufacturers, aggregators and retailers will take time and persistence.
Without such interoperability, DER may not efficiently integrate and deliver services. Hence the importance
of technical standards as a foundation for market integration.
Appropriate DER market integration is important within the scope of the Post-2025 market design
project to ensure all of the future markets and procurement mechanisms are as effective and efficient as
possible given the growth of DER and allow for both the supply and demand side participation. The Post-
2025 Market Design project is due to run until mid-2021.
The design of a two-sided market is particularly important as it aims to harness supply and demand at all
scales but especially supporting DER participation in both supply and demand. The Post-2025 two-sided
market is looking to build upon other reforms underway promoting increased demand side participation.
This will involve a design which unlocks demand and supply 'behind the meter'; designing new systems to
govern how bidding takes place in the markets and improving the way that electricity buyers and sellers are
described and regulated. The post-2025 market design includes the possibility of developing ahead
markets and essential system services (ESS) markets and procurement arrangements in which DER could
participate.
A range of activities are needed to ensure DER integration is effectively incorporated into the post-2025
market design. In particular, aggregators for DER participation in future markets need to be
accommodated in the rules and this needs to be addressed swiftly. Similarly, definitions of market
participants will need to be considered to support DER participation and it is likely that some version of
multiple trading relationships may be needed to allow DER owners to optimise the value of their hardware
and software by contracting with different parties for different service provision (e.g. separate contracts for
vehicle-to-grid (V2G) charging and discharging and household supply and demand response). Some of
these activities are being considered in the two-sided market workstream of the post-2025 market design,
as well as current rule change requests relating to integrating storage in the NEM
The overall market design will need to consider how value-stacking of DER services will work,
particularly to ensure effective competition for DER services for example for networks and ESS to enable
optimal value from DER.
In addition, social science research shows that DER owners are likely to respond to non-financial
incentives to provide DER services (for social good reasons), so this needs to investigated as part of the
post-2025 market design, alongside financial incentives.
In parallel with the post-2025 market design, piloting the use of DER for network services, wholesale
and FCAS markets and in local markets can continue. This is currently the focus of AEMO’s VPP
Demonstrations program.
12Local markets are a term used to describe the trade of electricity at a local level often between customers
in the LV or MV network. This term tends to be synonymous with P2P or peer to peer trading – in which
actors at a local level, perhaps even neighbours can trade electricity between each other, i.e. buying solar
from your neighbours’ roof. There are some trials of this concept but it is complex and made difficult
commercially due to full charges for distribution and transmission currently being levied. However, there
has been a successful trial of a local market using DER and taking into account network constraints on
Bruny Island. This year AEMO is establishing a Victorian local marketplace trial. Such local trading requires
a trading platform which takes into account the distribution network operating envelope and optimises DER
supply and demand. In the Bruny Island trial, Sydney University developed the NAC – Network Aware
Coordination platform which was highly complex software for optimisation even for less than 30 households
A further extension of this concept is the idea of ‘community energy’ where either there can be joint
ownership of distributed energy resources and/or large-scale resources (like the two wind turbines in the
Hepburn Wind Farm) and/or aggregation of the community’s DER. This makes the most financial sense
where there is vertical integration of generation, networks and retail where the community owner (say a
local council) can value stack across the supply chain and where the community owner is not-for-profit. In
parts of the United States local municipal electricity suppliers have set targets for renewable energy and all
residents are automatically enrolled in ‘community choice aggregators’ unless they opt for an alternative
electricity supplier. Some distribution businesses in New Zealand are community owned and households
and businesses receive dividends from the company’s operation at the end of each year.
‘Solar gardens’ are where low income households and renters who are unable to install solar panels on
their own homes buy shares in a large PV system (which can be local or distant) and have the electricity
generated from their ‘share’ deducted from their electricity bill. In New York, solar gardens were established
with a 25% minimum low income participation. Solar gardens have been researched through theoretical
pilots in NSW and Victoria but is not financially viable due to participants having to pay full network charges
for their electricity.
Some DNSPs are already using DER to provide network services, primarily using the AER’s Demand
Management Incentive Scheme (DMIS) and Demand Management Innovation Allowance (DMIA). Virtual
Power Plant and local market trials to provide supply and FCAS services are underway, especially through
AEMO and ARENA funding.
All these trials are providing vital insights especially on technical and consumer matters which will be able
to inform market design.
Critical path activities for market integration are:
• Acceleration of tariff reform and consideration of future pricing mechanisms
• Incorporation of DER into the Post 2025 Market Design, especially:
o Streamlining market participant categories in a way that accommodates DER aggregators
o Considering ways to allow for multiple trading relationship at a customer’s site
o Enabling value-stacking of DER services
o Considering non-financial motivation of consumers
• Piloting DER for network services, wholesale, FCAS/ESS and via local markets.
133 Pathway to DER Integration
DER integration will proceed through three overlapping stages, as shown in the diagram below. In the
foundational stage, technical standards are put in place, especially to support system security and
distribution network operation. Governance arrangements ensure standards can be updated and new
standards created as needed, including to support DER market participation. For the facilitating
participation stage, regulatory changes are made to support DER participation in the NEM, especially
through smarter DNSP systems (a combination of regulatory and technical changes). Planning is underway
for the full market participation stage where DER is active and optimised to unlock value across the system
and markets.
Figure 4. DER Integration Critical Path
The timetable below shows what this might look like year-by-year between now and 2025, noting that the
outcomes in the table below is likely to be influenced by the post-2025 market design project.
Table 1. ESB DER Integration Timeline
By the end of 2020
Action Relevant Relevant MDIs and bodies of
dimension(s) work
Initial DER standards in place supported by appropriate rule Technical AEMC consideration of Minimum
changes - with disturbance ride-through and minimum Technical Standards Rule
demand being priority standards Change
AEMO technical standards
consultation
14New governance arrangements for DER technical standards Technical ESB Governance of Technical
scope agreed by Ministers Standards Consultation
Options for improving hosting capacities based on LV Technical & ESB Data Strategy
visibility scoped Regulatory
The AER is supporting networks to deliver increased Technical & AER revenue determinations
hosting capacity for DER where this benefits all consumers. Regulatory
Identify communication, data and platform requirements. Technical DEIP Operating Envelope
Working Group
(possibly
Regulatory)
Trials of dynamic operating envelopes underway Technical & ARENA-funded trials
Regulatory
Trials of access to ancillary services markets Technical & AEMO VPP trails
Regulatory
SAPN VPP trials
Improved coordination/shared assumptions and data Regulatory Integrated System Plan
between Distribution and Transmission planning
Incorporation of more sophisticated DER scenarios in ISP Technical & Integrated System Plan
Regulatory
Pilots and operational projects with DER as non-network Market ARENA DEIP
alternatives underway
DNSP Demand Management
Innovation Allowance/Scheme
Accelerate tariff reform and consider future access and Regulatory & AEMC annual economic
pricing mechanisms Market regulatory framework review
AER tariff structure statement
process
Demonstration projects exploring Distributed Markets Technical and ARENA funded trials
underway including the building of a shared platform for Market
DER for DNSPs and AEMO.
Clearly articulate the pathway to DER integration including All This document
the sequencing of reforms in the post-2025 market design
By the end of 2021
Action Relevant Relevant MDIs and bodies of
dimension(s) work
New governance arrangements for DER technical Technical ESB Governance of Technical
standards in place Standards Consultation
DNSP hosting capacity continues to improve as improved Technical ESB Data Strategy
voltage information available to DNSPs
DNSPs
Dynamic operating envelopes working in SA, including Market ARENA DEIP
shared interface with AEMO
AEMO VPP trials
DNSPs
15Communication, data and platform requirements. defined Technical DEIP Operating Envelope
and an industry guideline established for operating Working Group
envelopes (possibly
Regulatory)
Further improvement in coordination/shared assumptions Technical ISP
and data between Distribution and Transmission planning,
through integration of DER into Distribution Networks in the
ISP.
Ongoing implementation of DER as non-network Market DEIP and DNSP funding
alternatives to account for evolving technologies
DNSPs responsibilities for hosting and supporting for Regulation AEMC
increasing DER embedded in the rules.
Framework to support the economic expansion of the grid Regulation AER
for DER. Study of DER value complete
Consultation on potential changes required to economic Regulation AEMC
regulatory framework to support DNSPs’ efficient
integration of DER – including issues such as community
batteries, ringfencing, clarification of role for DNSPs and
implications on economic regulation of networks
DER incorporated into post 2025 market design Market Post-2025 market design
Consumer engagement articulating opportunities for DER Market Post-2025 market design
value stack including access to the wholesale market and
provision of network services. AEMC
Implemented SAPS regime (if law changes are made) and Regulatory DNSPs, as appropriate
scoping of microgrid analysis to account for benefits of
islanding sections of distribution network from wholesale
market during market events as a shift towards modular
networks
Continual implementation of tariff reform, including Regulatory AEMC, AER tariff structure
consideration of EV specific tariffs statement process, DNSPs
By the end of 2022
Action Relevant Relevant MDIs and bodies of
dimension(s) work
Continued updates of technical standards with Technical ESB Governance of Technical
interoperability, communications and cyber security Standards Consultation
standards in place.
DNSPs move towards ‘smarter’ network management Regulation DNSPs
through greater visibility and improved operations
(supported by national standards, innovation funding, trials
and by direction set in updated regulatory framework)
Framework to support the economic expansion of the grid Regulation AER
for DER. DER Expenditure Guideline complete
Consult on national standards for communication, data and Technical DEIP Operating Envelope
platform requirements for operating envelopes Working Group
16Commence operation of dynamic operating envelopes Market AER
where there is sufficient DER to justify
DNSPs
Changes identified in AEMC review of regulatory Regulation AEMC
framework in 2021 implemented
Continual implementation of tariff reform; consider Regulation AEMC, AER tariff structure
implementation of vehicle-to-grid tariff arrangements statement process, DNSPs
By the end of 2025
Action Relevant Relevant MDIs and bodies
dimension(s) of work
DER positively supporting secure and reliable system Technical ESB Governance of
operation due to revised technical standards Technical Standards
Consultation
Commence operation of dynamic operating envelopes Market AER
where there is sufficient DER to justify
DNSPs
Comprehensive coordination or integration of distribution Regulation Integrated System
and transmission planning Plan/DNSP planning
Regulation and market design in place for DER to be Market Post-2025 market design
participate in appropriate markets on a broader scale
174 Road to 2025 and beyond
The unique and evolving characteristics of DER mean that the NEM needs to change to enable the optimal
use of DER. The objective is to optimise the benefits of Distributed Energy Resources (DER) for all energy
system users. This roadmap lays a pathway to this objective across technical, regulatory and market
integration which all interact.
Over the next five years, a collaborative and concerted effort will need to be made by market bodies,
governments and agencies to prioritise items on the critical path. Like the rapidly evolving technology in the
DER space, this Roadmap will continue to adapt based on learning in the market. Australia is leading the
work is consumer take up of DER. With that in mind, this document will continue to be updated as
milestones are achieved towards to final objective.
18Appendix: DER integration workplan for the market bodies
Technical Integration
Milestones
Priority workstream Workstream goal 2020 (Q2) 2020 (Q3) 2020 (Q4) 2021 (Q1) 2021
(Q2)
T1. Device standards • Appropriate DER capabilities • AEMO: Rule change AS4777.2-2015 published as an interim AEMC: DER standards • If
to enable grid support, request for initial standard (tbc 6 May for September rule change process approved,
interoperability, and to enable DER standards publication) including: completed rule change
system support and customers lodged by ESB, will come
• Improve clarity around withstand
to exchange value with the informed by AEMO – into effect.
requirements, specifically defining zones
grid, should they choose to. 30 April
of operation (eg. momentary cessation)
• Ensure appropriate
o Introducing Multiple Voltage
compliance arrangements in
Disturbances withstand
place.
o Introducing ROCOF withstand
o Introducing Phase angle jump
withstand
• Enhancing Grid support functions for
voltage and reactive power, and
frequency response.
• Improving the accuracy and stability of
measurement systems used in these
inverters to improve reliable
performance characteristics for a range
of grid disturbances.
• Designing suitable testing procedures
that clearly show when an inverter is
performing as required, or not.
T2. Comms/interoperability • AEMO: Rule change • AEMO: Industry consultation on DER • AEMC: DER
standards and request for initial standards/guidelines for data standards rule
protocols DER standards communications (interoperability) and change process
lodged by ESB, security established via DEIP. completed.
informed by AEMO – • AEMO: Industry
30 April requirements for
DER
standards/guidelines
for data
communications
(interoperability)
19and security
finalised via DEIP.
T3. Cybersecurity • Define interoperability and • AEMO: Commence industry consultation • AEMO: DEIP
standards cyber-security issues and to define interoperability and cyber- working group to
pathway for implementation security issues and resolution pathways produce final
through DEIP. recommendations
regarding
interoperability and
cyber-security issues
and resolution.
• AEMO: Commence
work on necessary
regulatory and
process changes.
T4. Data – for transparency • Appropriate level of data and • AEMO (DER data • AEMC: Competitive metering AEMC: Competitive
and operations information access to enable requirements): in arrangements review – development of metering arrangements
appropriate decision making at consultation with Terms of Reference and pre-review review -
various levels of the system. industry, develop consultation commencement
i.e. AEMO to run the power key data
system and market, networks requirement enable
to monitor and operate their DER integration to
network, thirds parties to support planning,
officer services to consumers, operational, market
consumers to make better functions (mid-
/informed decisions around 2020). Progress
energy use and services. necessary regulatory
and process
changes. (note, will
be developed
consistent with the
ESB data strategy
and linked to API
protocols).
20Regulatory Integration
- Priority Milestones
workstream - Workstream goal
- 2020 (Q2) - 2020 (Q3) - 2020 (Q4) 2021 (Q1) 2021 (Q2)
R1. Planning • Efficient investment across • AER: commence • AEMO: review the need to • AER: Draft • AER: Final
the system to deliver consultancy on enhance the Integrated consultation paper on consultation
reliable, secure and Value of DER. System Plan to support DER Expenditure paper on
affordable services to distribution planning, Guideline for DNSPs. DER
consumers. including by standardising Expenditure
scenarios and inputs for Guideline
network planning. for DNSPs
R2. Ringfencing • Ensure distribution ring- • AER Publish final
fencing requirements distribution guideline.
remain fit for purpose and • AER Publish draft
that DNSPs comply with transmission guideline
their obligations update.
R3. Storage • The regulatory • ESB: consultation • ESB: following consultation ESB: as required, progress
arrangement supports report delivered, with industry, outline any regulatory changes.
various business models for webinar held on recommended approach.
the delivery of storage into report
energy market.
R4. Non-networks • To ensure distribution AEMC: As part of • AEMC: Economic regulatory
alternatives businesses are making the 2020 Economic framework review
(eventually effective use of DER to regulatory completed
transitioning provide network services. framework review,
to network analyse DNSPs’
services uptake of non-
models) network
alternatives and
consider if further
reforms are
required
R5. Sandboxing • The regulatory • COAG EC: progress NEL
arrangements provide a changes to enable trial waiver
framework for trialling of and trial rule change
new concepts and ideas mechanisms for sandboxing.
(Minimum Viable Product, • AER: Commence innovation
MVP) prior to full scale roll enquiry service (subject to
out. resourcing).
R6. SAPS and • The regulatory • AEMC: DNSP-led SAPS - • COAG EC: response to
Microgrids arrangement supports and publish final report and AEMC
21create appropriate submit package of rules to recommendations
incentives around the COAG Energy Council and progress rule/law
establishment of changes as required.
standalone systems where • AER: Guideline
it is more cost efficient to updates following
do so. DNSP-led SAPS law
and rule changes.
R7. Voltage • Understand the current • Issue UNSW report • Liaison with jurisdictional
investigation state of voltage in LV with cover note and regulators to investigate and
networks across the NEM host webinar act as appropriate
and consequences for PV
exports
22Market Integration
Priority - Workstream goal Milestones
workstream 2020 (Q3) 2020 (Q4) - 2021 (Q1) - 2021 (Q2)
- 2020 (Q2) - -
M1. Demand • Encourage the effective participation of • AEMC: complete review • AEMO: complete
response the demand side in the wholesale market of customer protections detailed design of
mechanism by enabling third parties to access and framework for small wholesale demand
aggregate DR resources and exchange customers. This will services
value with the grid at times of peak. inform extension of DR
and DER framework (refer
to last item)
M2. Distribution • An efficient amount of both DER and • AEMC: As part of the • AEMC: Assessment of
network access network capacity is made available for Distributed Energy rule change on
and pricing exporting. Integration Program network access,
• Consumer choice is maintained, and (DEIP), consult on possible connection and
consumer-led investments that support regulatory reforms to charging arrangements
lower total energy costs are rewarded. distribution network (or AEMC commences
access and pricing work if no rule change
arrangements. submitted by mid-
year)
M3. Network tariff • To promote efficient demand response • AER: Final decisions
reform from end users, including investment and on revised Tariff
use of DER, to reduce network costs for Structure Statement
the benefit of all end users. proposals from SA and
QLD distributors.
• To send cost reflective network prices to
• AER: Draft decisions
retailers, to promote more innovation and
on initial Tariff
choice in retail market offers.
Structure Statement
proposals from VIC
distributors.
• AER: Tariff
Roundtable.
M4. Open Energy • Cross collaboration between AEMO and • AEMO: release final OpEN • Next steps TBC
Networks (DMO ENA to outline approaches and models to report (including cost
and DSO integrate DER into the network, whole of benefit analysis).
models) system, and market.
M5. Post-2025 • Market design, including valuing DER • ESB: commission advice • ESB: August • ESB: December • ESB: final
market design services to ensure efficient investment on incorporation of DER consultation paper on post-2025 recommendations
and operation of the energy market to mid-2021
23deliver a secure, reliable, and affordable into post-2025 market post-2025 market market design
energy services that supports consumer design initiatives design paper
choice. i.e granular pricing signals,
firming markets, ahead markets, etc.
24Relevant work linked to DER
Milestones
- Workstream goal - 2020 (Q2) - 2020 (Q3) - 2020 - 2021 (Q1) - 2021 (Q2)
(Q4)
Innovation funding • Appropriate funds are allocated to enable • Ongoing monitoring and action as required
investment in R&D to support delivery of value
add frameworks to the regulatory regime,
business operations, and consumer service
delivery.
Pilots, Demonstrations and • Undertake demonstrations to evaluate DER • AEMO: Victorian AEMO (VPP trial):
Trials integration activities to ensure operational, DER Market Place share trial learnings.
market and consumer value leveraged. trial to commence Progress regulatory
• Evidence based approach to regulatory change. changes to formalise
arrangements
EV roadmap • Integration of EV to support consumer choice • AEMO/ARENA AEMO/ARENA:
and adequacy of grid requirements. with DEIP: in consultation
development with industry
of plan for EV and market
standards, institutions,
tariffs, etc progress
priority
actions.
System reliability and • The power system continues to be managed in a • AEMO:
security stable and reliable manner, given changes in risk Renewable
profiles, including the effects of increased DER. Integration
Study released
Consumer protection • Appropriate consumer protections are in place • AEMC: Proposed
regarding DER technologies framework
published on
consumer
protections and
DER (via the Retail
Competition
Review)
25Contact details:
Energy Security Board
Level 15, 60 Castlereagh St
Sydney NSW 2000
E: info@esb.org.au
W: http://www.coagenergycouncil.gov.au/market-bodies/energy-security-board
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