simon currie - norton rose fulbright - global trends in deployment and regulation

Local Energy and Microgrids

Global trends in deployment and regulation

Simon Currie

Partner, Global Head of Energy

Norton Rose Fulbright Australia

28 April 2016

What are microgrids?

2 Local Energy and Microgrids - Global trends in deployment and regulation

Local Energy and Microgrids - Global trends in deployment and regulation3


• The Low Carbon Microgrid working group currently consists of the following

companies:

• ABB

• EDF

• Engie

• Eskom

• First Solar

• Schneider Electric

• NRG Energy

• CLP power


Deployment?


Customers?

Example: Island and remote communities


10 case studies – average annual electricity generation, % renewable vs fossil

Drivers of change – ‘the renewable microgrid’


Costs

“Economics was a

primary driver. Cost

of power production

far exceeds

revenues.”

Mr. Juergen

Zimmerman, Coral

Bay

- Falling renewables

cost

- High fuel volatility

Environmental

considerations

Communities expressed

concern over the future

impacts of climate

change, the

corresponding desire to

take action and reduce

carbon emissions, and

their deep cultural

connection to land and

nature.

- Emissions reduction

Abundant local

resources

“All communities are

vulnerable to imported

fuels; we have a vast

[local]

wind resource.”

Mr. Glenn Ross,

Falkland Islands

- Drive to electrify

remote communities

Challenges

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1. Grid Stability• phased integration approach, allowing operators to see how to initially bring a small amount of

renewable technologies online;

• work with small amount while balancing the system, and then continue to step up their renewable penetration by integrating more resources alongside energy storage and advanced controls.

2. Remote Location• transporting new technologies and equipment

• Getting construction crews on-site. Often, only one or two operators live nearby, so if major technical issues arise, teams must fly in to address the problems.

3. Administrative and bureaucratic requirements• A combination of government grants and utility equity has funded the addition of renewables in many

Pacific Islands.

• communities faced challenges stemming from fund or grant application processes, onerous documentation requirements, and the need to align bureaucratically imposed requirements with the overall energy transition timeline.

Local Energy and Microgrids - Global trends in deployment and regulation

Lessons learned

12

• Renewable microgrids can reduce costs

• Enhanced microgrid system resiliency and stability

• Energy efficiency is an important component of a renewable microgrid transition

• Storage is key component of largely renewable island and remote community microgrids


Education leading the way…


• Campuses interest in improving the ability to measure and reduce energy usage by tying together a campus’s power source, transmission, distribution and consumption into one system.

• Implemented at various universities in the U.S., including Illinois Institute of Technology, Howard University (first microgrid in Washington D.C.) and UC San Diego.

• University of Queensland installed a microgrid that will save approximately 1750 tonnes of greenhouse gas emissions annually - equivalent to taking 335 cars off the roads each year.

• CIT Bruce campus

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• Technological innovation, combined with aging infrastructure, extreme weather events, and system security and resiliency needs, are leading to changes in how electricity is generated, distributed, managed and consumed.

• Under the REV strategy, New York is spurring clean energy innovation, bringing new investments into the State and improving consumer choice and affordability.

• The REV initiative will lead to regulatory changes that promote more efficient use of energy, deeper penetration of renewable energy resources such as wind and solar, wider deployment of “distributed” energy resources (such as micro grids), and storage.

• REV goals by 2030:

- 40% reduction in GHG emissions from 1990 levels;

- 50% generation of electricity; and

- 23% decrease in energy consumption in buildings from 2012 levels.


Reforming the Energy Vision (REV)

Why Energy Transformation is Like Fixing the Plane

in Midair


Transforming power markets is not

easy; you cannot put the system on

pause while everyone collectively

re-arranges the parts.

To be successful, three

developments must move forward

together:

• Regulation needs to reward

utility performance

• Reliability has to become a

shared responsibility

• Risk must be reduced through

increased network participation

Integrated, intelligent microgrids

offer a long term path to deliver

clean energy for communities while

maintaining reliability and the

critical role of the utility.

Regulation

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• Risks relating to market design and unfit regulatory regime – compatibility with current design?

• Disruptive technologies driving market reform

• Lack of a clear definition for micro grids –what is a microgrid?

• Distribution network?

• Generator?

• supplier/retailer?

• Competition with public utilities – are utilities entitled to transition to fringe of grid loads to standalone power systems (SPS)?

• Interconnection regulations and procedures

• Progressive introduction of policy and regulatory incentives aimed at fostering microgrid development and implementation.


Regulatory Reform

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Future-proofing in Australia’s Electricity Industry Project (FPDI)

• FPDI intended to inform policy and regulation reform aimed at alleviating barriers to the integration of renewable energy and demand management.

• Changing shape of energy system increasing need for market reform

• Supply system moving from highly linear, centralised system of assets, markets, information, regulatory relevance and authority, and planning to a decentralised customer focused energy ecosystem

The Future

• Virtual net metering? Introduce more cost reflective pricing embedded generation output?

• Interconnection – extend the application of Chapter 5?

• Any changes must reflect community expectations for sustainability

• Changes to how Distribution Network Businesses structure pricing
