Energy explained: Distributed Energy Resources

2 min

AEMO is excited to announce a joint initiative with Energy Networks Australia to look at how best to optimise Distributed Energy Resources (DER). But what exactly are DER and why should energy consumers take an interest in this exciting new initiative?

Distributed Energy Resources (DER) can refer to a range of resources at the distribution level (poles and wires network on residential streets and resources behind consumers’ electricity meter), which produce electricity or actively manage consumer demand. A growing number of Australian energy consumers are using DER, such as solar rooftop systems, battery storage devices, and demand response/management resources such as hot water systems, pool pumps, smart appliances and air conditioning control.

Uptake of these technologies creates what is called a ‘decentralised’ energy system, where a significant amount of electricity capacity is generated at a smaller scale. This is in contrast to the traditional energy supply chain where large generators provide electricity one way through transmission and distribution networks to consumers.    

A number of opportunities and challenges arise with increased decentralisation:

  • Consumers who use DER can often reduce their power bills
  • If integrated in the right way, DER can benefit the wider power system by potentially delaying or eliminating the need for network investments, and can enable greater levels of resiliency in managing the variances of consumer demand.

At a whole-of-system and market level, AEMO as the market operator is responsible for economically optimising demand and supply to ensure the secure and reliable operation of the power system. To do our job efficiently, we require visibility of current and forecast demand and supply, as well as power flows across the system. The arrival of millions of new DER, which we have little visibility over, presents challenges in forecasting accurately. 

The exciting news for consumers – coordination of DER would alleviate many of the challenges, and in fact could very well turn DER into a major asset. There are significant financial benefits to be gained from optimising the behaviour of these resources. Energy Networks Australia’s, Network Transformation Roadmap 2017, developed with the CSIRO, estimated this potential benefit to be $1.4 billion in avoided network investment and a lowering of household electricity bills by $414 a year by 2050.

Collaboration is going to be the crucial element in successfully realising the benefits of DER. AEMO, together with Energy Networks Australia, has today released a consultation paper requesting industry-wide submissions. The key principles of the paper are outlined below:

  • Promoting consumer value, competition, technology neutrality and reducing barriers to entry across markets
  • Promoting information transparency and price signals that encourage efficient investment and operation decisions
  • Simplicity, transparency, and adaptability of the system to new technologies
  • Supporting affordability whilst maintaining security and reliability of the energy system
  • Minimising duplication of functionality where possible and utilising existing governance structures without limiting commercial innovation
  • Increasing the productivity of existing network investment through the use of DER as a tool to reduce operational costs
  • Increasing the resiliency of the power system through the strategic development of DER.

We invite customers, innovators, businesses, policy makers and the wider energy industry to share their views on DER. Those who wish to respond can provide written comments and feedback to by 3 August 2018. 

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