Energy Networks Conference
This is a conference for Energy Networks Australia, whose members make up the industry responsible for building and maintaining the poles, wires, pipes, substations, and other media for distribution of electricity and gas services.
“Oh you mean those guys who send me the damn bills every month?!!”
Well, no. That is your retailer and its important to understand the difference. The AER (Australian Energy Regulator) website describes the distribution networks clearly:
Electricity and natural gas distributors own and maintain the distribution networks, including electricity powerlines and power poles, and natural gas pipelines that carry electricity and natural gas to houses and businesses.
Your retailer is the company with the relationship to you. The Distributor – usually referred to as the Network – is the company building and maintaining the hardware.
My electricity retailer is Diamond Energy. I have an agreement with them whereby I pay for electricity usage in my house, including an agreed price per kWh and daily connection, as well as my feed in tariff (FiT) for exporting solar power. If I have any questions over my billing or service, I go to Diamond.
Diamond Energy sell their product to me via a network owned and maintained by Endeavour Energy (the Network or Distributor), who are responsible to ensure the network is up and running. If there is an outage, Diamond talk to Endeavour about resolution, and feed information to me.
The Network is focused on a working system, and the Retailer is focused on a happy customer. Classic, two-layered B2B (Business To Business) situation, operating in parallel with a B2C (Business To Customer) relationship.
On to Energy Networks 2019
I decided it would be pretty cool to take a few days off work, and go see how the big end of town do things. Trains, planes, and automobiles later, I was in Adelaide.
OK, its DISCLAIMER time: Yes, I was there as a guest of Reposit. No, I was not under any instructions to say certain things or do certain things. You can believe what you wish in that regard, and you probably will!
All I know is I’ve seen the technology at work, and it is good.
While wandering around the displays, I saw a lot of people who are high up in the industry domestically, such as CEOs and COOs and other positions with abbreviations starting in “C”.
There were also overseas players like Enphase CEO Paul Nahi, who was in town to get a look at the scene, and back up their announcements about working in Australia.
Our nation is gunning for a leading role in battery implementation, to go with its solar PV penetration rate. If only our governments would see this and pull their finger out …
It was slightly unusual that Reposit were bringing a customer to see the Networks, without a Retailer necessarily being in the way. The reasons why are down to what Reposit is offering to all layers of the market.
An Important Step
Things just got real in light of an announcement made last week by SA Power Networks (SAPN), the Network Distributor for South Australia.
They will be engaging 100 households in a Residential Battery Storage Trial in the Salisbury area, in the northern suburbs of Adelaide.
This is huge for customers, as they will benefit from installation of a subsidised system with either a Tesla Powerwall or Samsung ESS battery. Lower bills are practically guaranteed.
It gives the Network an unparalleled look at how battery technology can smooth peaks and troughs, and give them on-call resources in addition to existing generation. It may also help reduce network implementation and maintenance costs.
The smarts at the centre of systems installed? Reposit.
Bringing The Tech
That’s Dean Spaccavento, one of the founders of Reposit, being interviewed at the stand on Thursday. Good hustle!
In that shot, you can see a Macbook, which is running a live demonstration of the Reposit Marketplace application. This allowed networks to understand the capabilities Reposit from the back end, including the virtual power station concept.
The consumer end was demonstrated with a new iOS app, and as this involved dispatching power from my Powerwall, I made a couple of dollarydoos over the course of two days, which was a nice little bonus.
Together, the applications aptly demonstrated solving the problem for the network, and bringing the user into the circle of trust.
Along with a detailed rundown on how the Reposit Box makes decisions on behalf of the consumer, it provided a really good look at not only how the products work in theory, but how they were going to be applied for the SAPN trial. It is a very tasty thing to get a feel for it, while knowing a real-world scenario available for analysis over the coming months.
In addition to the Reposit team talking about technical aspects of the system, I personally fielded questions about where I sat as a consumer.
Understanding The Customer
For networks, the experience of battery users to date has tended toward those who want to get off the grid altogether, for two primary reasons:
The lifestyle consumer wishes to live in a location the grid can’t service today, typically in a rural area where land is cheaper. The capital cost of extending poles and wires can be prohibitive, so a battery system is often a better option, financially. At the same time, these people seek to build an efficient house, investing up front to ensure ongoing costs are minimal.
The combative consumer no longer wishes to pay for what they see as extortion from either the network, retailer, regulator, or government. Sometimes a combination of two or more. They tend to be older, cashed up, and technically minded. They’re ready to leave the grid at the drop of a hat, regardless of where they’re located.
In both cases, it is a very small percentage of households who can afford to take the option of off-grid living. Most of us don’t have money for enough batteries and solar panels to get us through a week of wet weather, and can’t even fathom being away from the safety of the grid.
Now, with the advent of smaller lithium storage tech, the networks and retailers are going to need to deal with a third type of consumer: the grid-connected battery user.
How to address this?
I suppose, after talking to a few people from the industry, some of whom alluded to specific service issues they were having in their backyard, the message I want to broadcast as a user is: don’t panic!
We Don’t Have Horns
A lot of us like having electricity that is reliable, safe, and affordable. While some might complain about their electricity bill, the fact is electricity still isn’t the biggest cost factor in a lot of households.
We’re not all about to up and leave the grid because Elon Musk mentioned it was a possibility. In a lot of cases, it still isn’t financially practical.
I spent a fair bit of money and solar + storage, and still have days where I run out of battery, or don’t fill it up. So I need the grid, because I don’t want to leave my family stranded. I also need fresh water connection and gas to cook with. This is all part of modern living.
What we want, as consumers, is to be treated fairly when it comes to giving you access to resources that we paid for. After all, it is what you expect in return for your resourcing of the grid.
Mistakes were made when it came to some of the early gross tariffs. Uptake of systems with a FiT of 40 cents / kWh or higher were higher than expected, probably due to poor planning.
That doesn’t mean the users contributing their exports outside those schemes should be given a rate approaching 50% of off-peak, either. It wasn’t our fault the government got a bit trigger-happy and / or gun shy about solar systems back in the 2000s.
I don’t really have a problem with solar export being paid at rate smaller than the single-rate import tariff. And I realise a lynch mob will be after me for saying that.
It comes down to simple economics: as you can’t guarantee supply of solar from rooftop panels, you can’t expect to charge the same as a guaranteed supply from the grid. That said, 5c / kWh is bloody ordinary.
It might not matter for much longer, because batteries change this dynamic – I absolutely can guarantee the delivery of power from my battery.
It is stored, often idle, and usually ready to go during the day by 1PM, with about 6kWh to deliver outbound. Get hold of another 100-200 users with varying battery types, and that might be a Megawatt or more, to help you fill a hole.
Particularly with Reposit managing my usage, I’m confident that most days I’ll be available for you, provided I’m going to get fair recompense for use of my resources. After all, if you come to me, chances are its cheaper than going somewhere else.
I can see a point in the future where solar feed-in-tariffs are no longer used, because it will so be advantageous to own a battery and keep a steady stream of electrons moving through it, rather than from the panels. Retailers will run to this solution, and networks will benefit.
Its just a question of how the reward will be calculated.
Getting To Know You
The first step for any Network stepping into this brave new world might be a tighter relationship with Retailers, and disseminating information you have on where the industry is headed with batteries. In turn, they can share with you their experiences, and what they’re seeing out in customer land.
Together, you can get schemes like GridCredits moving, with early intervention to prevent another financial blowout like Gross Tariffs. Can’t leave these things to the government, based on experience so far.
Will you look to have a flat rate like Diamond Energy’s GridCredits 100 scheme? Can you leverage your existing market spot rate calculations to flow through to users or chip a little bit of profit off that? Those are big money questions that this IT guy doesn’t have answers to. Its a work-on for you and the rest of the industry.
It might even be that you need to provide information on the practical costs of peak demand to the consumer base, in order to give users a view that goes beyond a perception of simple greed.
Of course, there are some people you’ll never convince otherwise 🙂
You’re still unlikely to see mass defections from the grid, but as the price of batteries drops, certainly more people are going to investigate the outlay to do so.
Increase in batteries and PV is going to see a decrease in grid usage against projected growth, which is already softening on a per-capita basis. This might affect profitability, particularly where a network needs to be extended to reach a growing population.
One of the facets of SAPN’s trial is to look at mitigating network capital costs by using the network resource that is user batteries. I’d be paying close attention to that, particularly where you are responsible for remote networks that require backup diesel generators etc.
How To Engage Consumers?
This is the multi-billion dollar question. As you may have surmised, I’m quite engaged.
Since this whole Powerwall thing landed in my lap, I’ve made it almost my second job to know everything I can know about how to most efficiently use the resources I have.
The rest of your customer base are probably going to tail away from that in terms of knowledge, right down to those who don’t understand the difference between Network and Retailer. They need help.
There is a wealth of data there, in terms of human feedback, that you – and the Retailers – need a relationship with. It will serve you well in the long term.
I shall sign off by imagining myself back in a trendy bar in an Adelaide laneway, hoping everyone looks forward to this bright new battery future as much as I do.