Grid Innovation: Unlocking Value Through Community Power Networks

 

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Hello and welcome to Wired for Good - conversations for a better energy future. The podcast where we explore the people ideas and innovations shaping Australia's energy future. I'm your host, Sarah Aubrey. In this episode, we explore community power networks and what opportunities rooftop solar, batteries, and other smart network solutions can do to reduce the costs of power, enable everyone to share in the benefits these technologies can provide, and speed up the energy transition by maximising the potential to make our energy within our communities.

As we navigate this exciting shift, we must also consider challenges such as the destabilisation of the grid and ensuring competitive markets are maintained to drive customer value. Today I am joined by Steve Lewis, Project Director of Community Power Networks at Ausgrid, and Sam Kernaghan, Director of the Resilience Program from Committee for Sydney to help discuss the energy transformation and how community power networks will benefit customers - both residential and commercial.

Welcome. It's great to have you both here.

[01:48] Steve

Thank you.

[01:49] Sam

Thanks, Sarah. Great to be here.

[01:51] Sarah

So this concept of Community Power Networks is a new one. Tell me how it came about and actually, what is it, Sam?

[01:58] Sam

Sure. Sarah. So, at the Committee for Sydney, we released a piece of collaborative research earlier this year called Sydney is a Renewable Energy Zone.

And effectively what we were trying to understand is at what scale should we be generating renewable energy and sharing that with, with the community? So, we know about regional renewable energy zones and the scale at which they work, but how does that apply to somewhere like Sydney? And at what scale should we be generating that energy to make it more equitable, accessible, affordable, and to help us, meet our net zero goals.

The community power networks are one scale at which, renewable energy can be generated and shared so that communities can better access that energy. And it's the work that Steve's been digging into at Ausgrid.

[02:45] Sarah

What has Ausgrid been doing?

[02:46] Steve

Yeah, so we kind of kept to the same thing as well. So, we're basically looking at looking at the grid, you know, and saying that you've got all these new technologies now that just didn't have 30 years ago when the regulatory rules were written and the way that the grid works.

And it used to be that, you know, power was generated over here, consumed over here, and all you needed to get from A to B is just needed poles and wires to connect the two things. Now though, with rooftop solar and batteries, we can actually generate here and consume here at the same spot.

The difference is though, that we need like a, you know, six-hour, time phasing from when the power generated to when it's consumed. So, the distribution networks job starts to move from being something which moves electrons geographically to something which moves electrons over the course of the day so that everyone can get power when they need it.

So, we start to try and sort of say, how would you do that? How do you build a network that supports this, supports more renewables and gives it, gives it the flexibility to work with customers to do what they want to do in this new energy world and to get the choices they can.

And that's kind of where the Community Power Network idea came from. And it's a hundred percent aligned to the urban renewable zone of seeing what we can get local communities to do and then how we can get the grid to be supporting that and encouraging it and making it work well for all customers in the area as well. Not just the people that can put solar and batteries into their own buildings.

[04:08] Sarah

So how, how does it benefit? Industry to start with.

[04:12] Steve

So, from an industry side of things, we have this problem at the moment in industries that under a typical retail, electricity contract, you don't get anything for your feeding tariffs.

So unlike on our houses where you get your, you get...

[04:26] Sarah

Nothing at all.

[04:27] Steve

You don't, it's very hard to get, very hard to get money. You've gotta sort of work out side deals and other sorts of things.

[04:33] Sarah

There's no incentive to get solar of it, right? No.

[04:35] Steve

No, so that is why when you fly into any of the major cities and you look down and you see these big open roofs with, you know, a couple of strips of solar panels that won't end because that will work for self-consumption. So, they will be getting as what they can do and, and sort of working along that. But there is no incentive to put a single panel on the roof more than what you can self-consume.

[04:54] Sarah

All that real estate

[04:55] Steve

all that real estate just sits there untapped. And then especially in places like Botany-Mascot, which is one of our pilot areas we're proposing literally across the street you can have a whole bunch of apartments who can't put solar on

[05:08] Sarah

and would love to

[05:08] Steve

And would love to. So, yeah. So this is, this is the concept that's how do you, how do you link these things up? So how do you get an incentive for industry?

It's basically how do you make that solar valuable? And so what we're gonna do is basically put battery's distributed around the grid, and then they become the sponge. So, they can then absorb that local solar, so keeping it in the local area and then make it useful so we can then say, right, that power is going to then be shared with everybody in the community later in the afternoon.

And therefore, by being useful, it's valuable. So, we can afford. The Community Power Network will afford to pay the owner of the building where all the solar is sitting. A sensible number, which, you know, helps them to make that a good commercial decision, so they get value from their rooftop. They'll also get some more solar for their own consumption as well.

So that's how they win. So, they basically get to win by being able to get value for their rooftop. And then the whole community wins because now that there's more solar in the system, those batteries can use, that they can create value. And then the way the community power network model works is everybody, everybody in the area doesn't matter whether you have batteries or solar or live in an apartment or live in a house or a small business.

Um, you will all get a share, an equitable share of the benefits that all those batteries are creating.

[06:29] Sam

And this is a huge part of it, from what we heard from lots of commercial industrial businesses. They need that incentive to change their behavior because at the moment, they're property businesses.

They're focused on, you know, providing cheap and renewable energy to their tenants, but they're not focused on providing, using that extra rooftop to provide additional energy back into the grid, particularly if there isn't, a financial incentive to do that. So, we see those rooftops, as Steve said, when you fly in and say, why isn't that being used?

But they actually need a significant incentive to think differently, to then behave differently. And so, this model, the community power network is one way of saying actually, how can we change your behavior and help, the community's benefit, but actually you need to receive that financial benefit as well.

[07:12] Sarah

How, how does the community, like small customers or even big customers, residential wise, apartment dwell as you were saying, or renters, that's the big frustration, isn't it? That it's not equal about who can get solar. How do they benefit?

[07:25] Steve

So, they'll benefit by effectively being able to access these batteries because they become part of the network.

And the network is effectively a community asset. You know, that's Ausgrid's job is to basically run all of these assets on behalf of the community and then do that in a way that you know, is fair and equitable and everything gets shared. So, when the batteries operate, when they absorb all the local solar, and then they will push that out into the market back in the afternoon.

That creates value because the electricity's worth more. So all of that value gets stored up in the community power network. And then the mechanism for them to get, for that value to be reshared will be, once a year we'll make a dividend payment out of the pool that the batteries have created. And then everybody in the area gets the share of that.

[08:12] Sarah

So, I do get cheaper bills?

[08:14] Steve

Yep. So, it should, hopefully, we're working with the retailers as well to make that a nice, really simple process. So it would just appear on your bills.

[08:21] Sarah

That's amazing.

[08:21] Sam

And we need to understand that more and more Sydneysiders are living in apartments, right?

Whether they're strata owners or they're renters. Uh, a lot of the work that we're doing at the moment is to increase density around train stations, around other areas of good, transport nodes, etc. So, we're encouraging people to live in apartments, but at the moment, they don't have the opportunity to benefit from the same cheap and accessible renewable energy that, that homeowners do in, detached dwellings.

So, we need to make that, that equity case and we need to make those equity models so that when we're encouraging people to, to live in those higher density dwellings, they've actually got the opportunity to benefit from those cheaper energy bills and partly for financial reasons, but also because they want to, right? There's huge numbers of communities living in these high-density dwellings who want to be accessing renewable energy. They want to be benefiting from solar locally and from the batteries that are being provided.

[09:19] Sarah

Well, you wait till we become like Germany with solar panels on the balconies, they'll become little energy producers anyway. Yeah,

[09:25] Steve

Yeah but that's a really good point. We've had a couple of the advocacies for the people who live in apartments and for solar supporters who are all saying that this is, you know, this is a big thing that there's lots of people in apartments who really want to, not only for the cost savings, but just, you know, for the environmental aspects, but just don't have a way to tap into that yet. This gives them a way to effectively, fund some solar panels on the building across the road. And then to get the benefits of that as part of the community.

[09:54] Sarah

So this sort of model, how does it impact how Committee for Sydney thinks about the future of Sydney?

[10:02] Sam

So one of the trends that we're absolutely seeing is the trend towards more place-based approaches to thinking about your community, thinking about the city. And so that's from an environmental perspective, from a density and housing perspective, but also from an energy perspective

And so, we've seen models overseas, the Netherlands, for instance, has community energy hubs which are, you know, ways of sharing and storing energy so that your car and your bike and your house can tap into those batteries. And that's kind of something we're starting to see replicate here in Sydney.

So when we are thinking about that future, we're moving to more electrified houses, cars, other forms of mobility. Thinking about that at a, not just at a household level, at a community level, at a scale at which enables people to benefit. So, they don't all have to own their own assets. They can actually share those.

We're seeing that community starting to share, you know, tools and things and so that everyone doesn’t have to have their own gardening tools. It's same kind of idea, but at a bigger perspective and something that they have less control over, you know, the community battery or the neighborhood battery or a battery at a bigger scale.

[11:13] Sarah

So, what are the benefits for a community battery versus everyone just going out and buying their own battery for their house?

[11:19] Steve

Some people want to go and buy a battery and other others, others just won't be able to put a battery in. So, there's that group of people that just can't access their own battery.

But there's also, it's actually, it's also financially cheaper too, because if everyone buys their own battery, that's at home scale. If you buy the battery, so our batteries that we're looking on our trial, they're about the equivalent of sort of 50 or so power walls. So you just get a much better scale.

And so, they're still small enough that they can fit into the community without being in the way and sort of taking up space, which is valuable for, for the community. But large enough they can get that better scale and that gives us better costs, which means that even though you don't own your own battery, the share of the battery, the slice, which is effectively yours, is cheaper than having your own battery.

[12:04] Sam

The challenge is for an individual household that might have a four or $5,000 energy bill or more, by installing their own solar in their own batteries, they can significantly reduce their energy for that one household. And so offering them, you know, a $200 benefit versus their bringing their cost down by a thousand dollars might not work.

But, as Steve says, averaged across the community, not everybody can do that investment. But if averaged across the community, there's a benefit as, you know, Ausgrid have worked out, and so there's a challenge there about which way is the most efficient, but certainly that individual versus the collective is a different way of looking.

[12:49] Sarah

And both those things can exist alongside each other, right?

[12:52] Steve

That's what I was going to say, that the competition you still want to make sure in there. So, like we've been really conscious about trying to make a solution that means everyone can share, and everyone can get a benefit. But we're not closing doors on innovation.

[13:07] Sarah

No one is forced to go and be part of something. Go and get your own battery..

[13:07] Steve

Exactly. You can still pick whatever retailer and whatever retail model that you want. So, some of the new innovative retail models still absolutely work inside what we're doing. We are thinking that, you know, there will be people that own batteries and entities; it could be a retailer or a battery operator.

They can all still own batteries on the network and do all the things that they're doing now or that we'll do into the future, and then what Ausgrid's role should be is to have just enough battery to do its network thing so that will maybe be a fifth or something of the batteries that are required in the future.

But it'll be just enough so that once you see what everybody else is doing, you know, where do you have too much solar over here and too much battery over here? And then where do you need some balancing? And that's what we should be providing.

Like just that, that last bit to balance everything and to make this home for the local solar because that's not a mechanism that a commercial battery is just designed to buy, you know, the commercial battery, commercial battery model doesn't really matter, sort of who owns it. It's kind of how it works is you try to buy energy at the cheapest price, sell it at the highest price, and make as much money off the battery that you possibly can.

And if you're a retailer, then a share of that money that you make, you'll give back to your customers. Whereas what we are saying is that, no, we actually want to create this local, this incentive for local generation. And so that means that we will be locking in a price that that commercial entity knows they can get for their solar.

That gives them the incentive to go and put it on the roof in the first place. That creates the local solar, which then gives everybody in the community the cheap power. So, it's really important that this happens, but it's not something that a commercial battery is going to naturally want to do.

[14:48] Sarah

So, the Ausgrid batteries primarily are to soak up excess solar?

[14:51] Steve

That's right. And then to use that to flatten out the grid demand because then we can balance our network. That gives us a whole lot of benefits down the track in not having to spend more money on the network. So that's going to lower the network tariff component of everyone's energy bills.

So that's a long-term benefit, but that's definitely something that will be material into the future if this kind of concept was rolled out. So that's really important.

But you also then don't want to crowd out the market so that the commercial battery plays and, you know, people that want to own their own batteries, that still should absolutely be supported.

And the community battery, the community power network by having the batteries in today, it will be more robust as well because the batteries give the network more flexibility. And so, what it means is that the network, we are kind of saying that we'll make the network change its behaviors and be able to deal with what customers want more.

Rather than having to work to a model where you have demand response and solar curtailment and all these things where you are basically saying that customers can only do these things because they need to live within what the network can do. We want the network to be able to deal with whatever customers want to do.

[16:00] Sarah

Oh, I like that.

[16:02] Sam

But, part of this then is to understand, so Steve's talking about temporarily moving, you know, moving energy from during the day to the evening. And that's a really important part of this concept. The other part is then testing it spatially, right?

So, in some parts of the Ausgrid network and some parts of metropolitan Sydney, you're going to have this goldilocks zone, right, where it's really easy to balance the amount of generation and demand, easy. You know, it's possible to balance those two. But at other ends of the spectrum, you're going to have areas where there's really low generation, whether that's in areas where that's high density, lots of apartments, and at the other end of the spectrum where there's lots of generations.

So, lots of warehouses and commercial industrial where there's lots of potential. So, we need to be testing this model, yes in that goldilocks zone. But also where there's not enough generation or there's too much demand, equally where there's a lot of generation and not enough demand.

So, it's, it's kind of working that, testing it across a whole range of different, places, so it's not just working in communities where you've got that balance.

[17:11] Sarah

Is that why you're doing two very different demographics? So, Mascot-Botany, lots of industrial space that's empty and apartments low solar, but then you're doing Charmhaven, which is residential with pretty much the standard uptake around 30 odd percent, isn't it? Of rooftop solar. So is that why you are doing two very different trials?

[17:31] Steve

Exactly right. So, I think there's two things that answer to Sam's question is, you know, what you just said is a hundred percent correct. So, we've gone Mascot-Botany, you know, it is just literally all industrial. It's 68% of people live in an apartment, 50% of those people rent. So, it's like literally the perfect kind of zone.

But then we said, yeah, that's gonna sort of solve the areas all around, just your major cities, but. That's probably 30% of the network and 30% of customers. Yeah, so we've picked Charmhaven on the Central Coast, so it has at the moment about 30% solar uptake. It also has about 30% of people still are renters, which is quite high for just a typical, residential zone. So, we thought that's a great spot to give it a try as well. Still lots of people up there who could benefit from a community power network and we will be able to see then you know, how you can make it work in different environments.

And I think the other side of it is as well, is comes down to how big does your community power network need to be to get the balancing, if you make it too small then you won't have the mixture of different types of buildings and consumers in there to be able to get the balancing act right.

But if you make it too big, then you've got power flowing all through different parts of the network. And so, your solution gets too complicated and you're almost back to the grid, as the full thing. So, you want to get the right size to just have enough network involved, but big enough that it's got all the different people in there that you can share power amongst.

[19:02] Sarah

So, what are the actual benefits for the community of the community power network?

[19:06] Steve

The big main one is we're modeling that it will reduce energy bills by 150 to $200 per annum per customer, and that's all customers. So doesn't matter whether you can put solar and storage in, you live in an apartment, live in a house, you have small business.

[19:21] Sarah

That's free money for everyone.

[19:23] Steve

That's free money for everybody. Yep. If you are lucky enough to have the roof space to put, to put solar on. We're expecting it to be two to three cents, somewhere around that kind of number. This is what commercial markets will pay.

[19:34] Sarah

Extra on your feed-in tariff?

[19:35] Steve

Yup, two to three cents extra on your feed and tariff.

So again, that's free money for what you're doing.

[19:40] Sarah

Free money.

[19:41] Steve

So this is awesome. And then as a network operator, we're really excited that we can use the batteries to flatten out the load profile. We will be able to get more energy through the same network and that's probably the biggest lever that's available for us to be able to really make a meaningful impact to the cost of electricity.

[20:03] Sarah

Bringing our bills down.

[20:05] Steve

Yes. And the decarbonisation, I mean, that's where, so with the Community Power Network, we're thinking by getting more solar onto the area, we can produce 30% of the community's local power. And in Sam's modeling, that's up to 75%, potentially.

[20:24] Sarah

75%! Bring on the 75%.

[20:27] Sam

So, we got into trouble with the engineers, but effectively our modeling suggested that if we put rooftop solar on every building across Metropolitan Sydney, we could meet 75% of our energy needs.

[20:38] Sarah

and batteries?

[20:39] Sam

We need the batteries to store that and share that. You've got start with actually getting rooftop solar.

[20:44] Sarah

75%. 75%.

[20:48] Sam

Absolutely. Why not?

[20:50] Sarah

Yeah. Hell yeah!

[20:51] Steve

And that's then power that is going to be produced locally, which can be done in parallel to the large-scale transition work that we're doing. But it also, you know, we're seeing quite a bit of headwinds around building the big scale stuff and then connecting it back into the grid.

If we can, if we can do more locally, whether it's 30% or 75%, or somewhere in between, it's, it's still a good number. It's a big number. And that is power that can be made. Then it doesn't need any more network to connect it up and to use it. So, it's definitely a really efficient way for us to get power.

And it really should be, it

[21:25] Sarah

It must be surely much cheaper than building huge infrastructure somewhere else.

[21:29] Steve

Absolutely, because you don’t need the network. Right. The network is already there to make it work.  So you basically, I think the right answer is you build as much of this as we possibly can, you know, fill all the rooftops that are practical to take solar.

And then once you've done that, then you'd say right now, I'm still going to definitely need some large scale, but the large scale should be the thing you do after you've made as much as you possibly can locally.

[21:49] Sarah

See how this sits first. So, all of this sounds amazing and a little bit too good to be true. Are there any losers in this?

[21:55] Steve

So, the only people that I think there's a transfer of some of the benefits and the wealth that is created out of doing that generation and then doing the arbitrage. So traditionally that's been the big generators and, you know, maybe commercial battery operators that are doing this and taking that value. Under the model such as the community power network that's now effectively local property owners and then the customers that, that wealth is been transferred to.

So in that, I guess there's a little bit of wealth transfer, but there's also other mechanisms and other ways that, you know, the, the bigger traditional generators can benefit by adapting and moving into this world too, which, you know, we're partnering with them and they're running their own trials in this space as well.

So, it's not all downside. But I think that's probably one really clear transition of value moving from a commercial entity back to customers, which I think is, is still a good thing.

[22:51] Sarah

I'm all for that. Any final last thoughts or takeaways from today's conversation that you'd like to share? Any wishlists?

[23:00] Sam

So, for me and for Sydney, households are struggling with their energy bills. We know that we are not on track to reach net zero, the inequity of access to rooftop solar and batteries is significant and something we should acknowledge across our city and across our country. We have a major challenge around our energy security.

This trial is not going to solve all of those things, but it's a step in the right direction. And I think that's one of the things we should embrace around this innovation, this way of thinking that Ausgrid's taken on and other energy networks to actually look at the trials, look at the ways of trying to combat those challenges.

That's my big takeaway.

[23:43] Sarah

That's great. What about you, Steve?

[23:45] Steve

It's that get involved message. I think, as Sam said, I'm sure we won't have it all right. You know, it's a big change and there's lots of moving parts to it, so almost that'd be the one thing we can guarantee that there will be some things that, could have been done better.

But I think it's moving us in the right direction. So, for partners in the energy sector to say, let's try this along with other things as well. So, it doesn't need to be the only thing that gets trialed. So, make sure that we all work together to build a better solution for customers.

And then for the big commercial industrial properties, we need to get those rooftops engaged and get the solar on them. So, for those people to jump on board with it and take advantage of what's going to be a great opportunity for them.

[24:31] Sarah

There's going to be a lot of, I assume, community consultation and messaging that this is correct happening and this is what you could make, or this is what you could save.

[24:40] Steve

Yep. Yep. And that’s already commenced, both the councils involved in the pilot areas are all across and aware of it and starting to push that into the communities. We are starting to work out where are some good community events that we can attend to touch base with people. A lot of the consumer advocates have already been engaged and involved in the process, and so they've had their thoughts and you know, their position. So absolutely we need to do a lot of that, and that will be where we generate our best learnings.

[25:13] Sarah

Well, thank you so much for your fabulous insights today.

[25:16] Sam

Thank you

[25:16] Steve

Thank you. That was good fun.

[25:18] Sarah

We hope you enjoyed today's discussion on the Grid Edge. Join us for our next episode on Distribution System Planning, as we take a look at the potential of the NSW networks to host more renewables and match customer demand with local generation.

For more information on today's episode, visit wiredforgood.com au. Don't forget to follow us on YouTube, Spotify, or Apple Podcasts, so you never miss an episode.