1 INTRODUCTION

There is only one boss. The customer. And [they] can fire everybody in the company from the chairman on down, simply by spending [their] money somewhere else.

–Sam Walton: Made in America, My Story, with J. Huey (1990)

More so than anywhere else in the world, Australia’s electricity customers are choosing to spend their money on rooftop solar PV systems. There is a worrying trend in Australia, however, to limit customers’ PV connection, generation, and export due to the real and perceived limits of the low-voltage distribution network.

The limits placed on solar connections result from the fact that the electricity network has physical limits that, if breached, damage customer and network equipment and endanger safety. While these limits, also known as network hosting capacity, are knowable, they are for the most part unknown within the low-voltage distribution network. This lack of knowledge predisposes network businesses to act more conservatively than they would with greater awareness of the true limits. The result is a lower overall utilisation of existing network infrastructure, greater costs, and reduced control by customers over their energy usage.

Table 1-1--DNSP LV network visibility (DNSPs surveyed by the AEMC and ENA in 2019)

Bar and value indicate level of visibility; upward arrow indicates increasing trend. Source: image from AEMO, Renewable Integration Study Stage 1 Appendix A: High Penetrations of Distributed Solar PV, 2020. Derived from detailed DNSP responses to AEMC LV network visibility survey.

There is, of course, another path. Customers’ solar, batteries, flexible appliances, and electric vehicles (collectively referred to as distributed energy resources – DER) can be effectively integrated into the distribution system. Through their intelligent operation, they can actually enable the network to host additional customer DER and provide a number of

additional services to the wholesale market and the network. All of this can make total costs decrease throughout the network – for those customers with DER and those without it.

Navigating towards this preferred path requires more effectively exploiting the networks’ limits, though, as mentioned above, the networks limits are unknown. While the invisibility of network limits may seem surprising, the reality is, networks have never before needed to know their status in short term timeframes.

A one directional electricity grid – with power coming from a few, large, faraway power plants – delivered affordable and reliable energy through a ‘set and forget’ design. Such a grid can be well designed largely through effective planning, and relatively static customer behaviour enabled planning to work off reliable assumptions. Technology, specifically lowcost solar panels, changed all that.

Roughly one in four Australian households have solar today, and all signs indicate that customer adoption of solar is still accelerating. Add batteries and electric vehicles – whose widespread adoption has not yet been proven but can reasonably be assumed – and you have a very dynamic grid, with significant amounts of power coming from what was previously the “end of the line,” and an increasingly large range of behaviour from customers. In short, the grid now changes so much, so quickly, that relying almost exclusively on planning and a “set and forget” design is no longer fit for purpose.

The clear alternative to relying on planning to ensure a reliable and affordable grid is to improve and increasingly rely on operations – that is, actively managing the grid in short time frames (making regular changes to settings at least daily or weekly, if not every hour or every minute). Dynamic operations and management rely on measurement and data and increased visibility.

The primary challenge with increasing visibility of the low-voltage network is the cost. Australia’s distribution system’s total length is roughly 850,000 km – a length longer than a roundtrip to the moon.2 Exhaustively monitoring it is simply not an option. Even adding a modest amount of visibility has proven challenging. A reason for this challenge is that network businesses proposals to improve visibility typically rely on estimating the benefits from greater DER integration (which the visibility will enable). Estimating those benefits effectively, however, itself requires improved visibility. Networks struggle to credibly claim the benefits of increasing PV hosting capacity when they are unable to accurately identify the existing hosting capacity of their system. In other words, networks find themselves in a circular argument in which they lack the visibility to justify investments in additional visibility.

By adopting their draft determination on “access, pricing and incentive arrangements for DER”, the AEMC will encourage and facilitate networks actively providing export services to customers. This rule change would also encourage greater awareness of network limits and

2 Mission Innovation, Smart Grids Innovation Challenge Country Report 2019: https://www.mi-ic1smartgrids.net/wpcontent/plugins/dms/pages/file_retrieve.php?obj_id=154

constraints, though demonstrating that the benefits of greater network visibility outweigh the costs of data collection will likely remain challenging. One potential way to address this challenge is to have DER provide a wider variety of benefits to the grid – not simply benefits to the wholesale energy market, but benefits to the transmission and distribution networks, like deferring or avoiding upgrades and managing voltage. These greater services would increase the value of DER, and thereby make initiatives to improve DER integration simpler to approve. But of course, making the provision of grid services commonplace from DER is itself a challenge that likewise requires better data and improved communication of that data to the wide variety of actors that engage with DER.

This report is the output of a project focused on these interlinked challenges and opportunities – providing low-cost visibility of the low-voltage network, assessing and communicating the grid’s limits, and mainstreaming customer DER network support – and developing a research roadmap to navigate them. The purposes of the project and this report are to help align industry stakeholders on the current challenges and issues related to network visibility and DER hosting capacity utilisation, and to identify a research roadmap that can help the RACE for 2030 CRC (and others) guide research in this topic area.

The immediate next section summarises our overall methodology for conducting this study. After that an extended section focused on the existing state of the industry’s capability in addressing these topics follows, with sub-sections focused on four sub-topics (visibility, assessing hosting capacity; data mapping; and mainstreaming DER network support). We progress then to an identification of barriers to solving industry challenges and a list of research questions. Finally, we conclude with an economic potential assessment that provides a rough, but indicative value of effectively optimising DER hosting capacity in Australia between 2025 and 2050.