The latest report from Transpower highlights our homes and business will play an active role in the operation of the power system of the future by ensuring we extract the full value from the resources we use to generate electricity.
Transpower commissioned an independent report to help influence Distributed Energy Resources (DER) investment decisions (size, functionality, and utilisation of additional capabilities) through industry-wide DER integration policies based on an assumption of accelerated DER uptake.
DER in New Zealand is chiefly comprised of solar PV, batteries, and electric vehicles located within our distribution networks and not connected directly to the grid.
The volume of DER is expected to increase significantly in the future as technologies drop in price and become more ubiquitous. Currently, DER investment decisions are driven by consumer benefit (lower power bills and environmental concerns) but Transpower highlight DER is capable of delivering, and being compensated for, additional system-wide value. "DER has a valuable role to play in enabling NZ’s decarbonisation path by assisting to smooth peak demand, avoiding the need to build new peaking thermal generation".
As other have countries have done, defining the value of DER by its value to the current electricity infrastructure is the key.
The values include “avoided costs” of generation, transmission, distribution etc as well as energy arbitrage, resource adequacy (supply grid during demand times) frequency management, harmonics, reserves, simulated inertia, black starts etc
As at 2020 the current value of this to the grid is $27 million
By 2035 total value is predicted to be ~$650 mil, by 2050 value could be ~$1,029 mil
As an example and quoting from the report;
- “DER as at 2035 could potentially access $588m by shifting 2,400MW of load from the evening peak.
- Each MW of load shifted being ascribed a cost-saving, and therefore maximum accessible value available to DER, of $245,000 p.a.
- The costs being saved accruing through avoided generation, transmission, and distribution assets which would, otherwise, be needed to meet the higher peak load”
SEANZ has long advocated that DER provide value to the grid beyond the recognised savings to individual consumers and we support Transpower's approach to understanding the value and forecasting this into decisions around peak demand and avoiding new peaking thermal generation.
SEANZ 2016 report “SOLAR PV AND BATTERIES IN NEW ZEALAND – CONSUMER CENTRIC ELECTRICITY” put the value of solar and batteries to New Zealand much higher. In 2016 the report found:
- By 2040 New Zealand solar households could have saved between $NZ 1.35 - 3.4 billion but the benefits are not restricted to just solar owners,
- Solar households have already saved the country NZ$ 860,000 in avoided greenhouse gas emissions,
- MBIE modelling shows that solar installed with batteries will become the norm and that avoided greenhouse gas emissions costs could total NZ$ 0.5 billion in savings to the country between 2016 and 2040
Critical points for SEANZ to leveraging DER are around equal access to markets:
- There needs to be new ways to match up those that can provide services (and get paid for the services provided) to those that need them
- Buyers and sellers of DER need a platform or market where they can meet and trade
- Enabling more providers of DER and services than current electricity companies and that can compete with the current electricity companies
- Allowing DER to provide services back to the power system that have traditionally been provided by large generators or power lines
We look forward to progress on these key issues by Transpower and the Electricity Authority.