Some Key Areas f or F uture R esea rch:

3.26 What is a holistic business model for a hybrid VPP/microgrid/community battery system? What additional technologies and energy management strategies are required for such a system?

3.27 How can the VPP coordinator act as a tertiary-level controller for a microgrid given that a tertiarylevel controller also needs to consider other additional aspects, such as weather forecasting, markets and line capacity limits?

Economic value of capacity firming using renewable energy when supply and demand can be best matched by aggregating microgrid and community battery operation

Economic value is a calculation of the profits an asset has produced or may produce in the future. It is a measure of the benefit a service or technology provides to the customer. However, the concrete economic value in such a system depends on many variables, including the different types of interconnected DER, the grid’s location and to what degree is it receiving renewable power, the interconnection of the microgrid (embedded or islanded), the sizing of the community battery and the microgrid battery and others. Therefore, the economic value and potential of profitability of a system can only be estimated based on current projects and their findings.

The first Australian community battery trial by Synergy (Western Power, 2018, Our community battery storage trials) took place in Meadow Springs, WA. Forty-four residents virtually stored excess solar power during the day and consumed it in the evening or overnight via access to a community PowerBank battery. The results from the trial showed a daily average of 7.3 kWh of energy stored and 5.2 kWh consumed for each participant. By selling the remaining 2.1 kWh to the grid, each resident saved an average of $228 and more than $11,000 saved on power bills across the entire trial. This made the community battery a cheaper option compared to home batteries. The trial not only proved that community battery saves money, but it also supports the grid, making it a viable option for future applications.

According to research conducted by ARENA, microgrid initiatives that utilise solar power and batteries have installation costs of less than $4 million per megawatt of capacity. While the initial investment required is high, the savings potential is considerable. The levelised cost of energy (LCOE) for microgrids, according to the International Renewable Energy Agency, IRENA, falls within the range of 10-15 cents per kWh (Solar Bay, 2020). This is 50% less than the cost of electricity produced by diesel generators at about 40 cents per kWh (Solar Bay, 2020). Over time, the cost of electricity from a microgrid is expected to be substantially lower than the cost of the existing electric services. Both community battery and microgrid projects have proven to substantially cut costs of electricity and power consumption compared to the existing power grid. However, in order to provide an accurate estimate of economic value, the interconnection of the two systems must be further studied.

Key Areas f or F uture R esearch:

3.28 Could the economic value of battery storage within a microgrid be increased by decentralising via the implementation of community batteries in the way of CBs? This needs to be investigated by considering the change in technical performance as well

3.29 What is the best way to determine the size of storage capacity needed to ensure the economic benefits to the prosumers are optimised?

3.30 Given that the storage, generation, and demand are fixed, how to develop an automated control system to use only the most economical energy options at a given time?

What are the economic value streams?

The economic value streams offered by MG, VPP and Batteries and integrated system are summarised in Table 10

Demand response

Power-export

Resilient and reliable supply

Direct value streams

Local/Peer Energy Trading

Energy Arbitrage

Ancillary - FCAS

Ancillary - voltage

Subscription/Partnership

Import

Indirect value streams

Increased hosting capacity

Reduced energy losses

Upgrade deferral

Congestion relief

Microgrids offer the main value streams, including enhanced supply resilience and reliability, demand response management (price and event-based incentives and direct/indirect benefits), power export, and ancillary and network support services (Stadler et al., 2015; Monash University, 2019; Wright et al, 2022)

Virtual power plants’ key value streams include subscriptions (or partnerships), energy arbitrage, local and peer energy trading, and power export participation (AEMO, 2021b).

Community batteries’ key value stream includes subscription, participation in demand response management, power export and import, arbitrage, and ancillary and network support service (ANU, 2020b; Shaw et al., 2020; KPMG, 2020)

Microgrid - VPP - batteries: It is expected that the combination of microgrids, VPPs and community batteries will result in a mixture or hybrid of the individual value streams of the different technologies. An integrated system will likely lead to more efficient management of distributed storage resources and other connected assets. There are currently no known combined trial systems in operation or being tested.

Current theoretical and actual projects are providing limited or no evidence on to what extent and how these different value streams contribute to the overall microgrid, VPP and community battery revenue/profit for the owner/operator and its customers. It is not yet known whether any individual or combined system is the most viable energy solution (business model) compared to other related energy business models (e.g. stand-alone solar PV and battery systems). These streams need to be quantified theoretically and practically (through demonstration projects) for a range of current and future technology costs and operating and regulatory scenarios.