Taggerty MicroGrid

A traditional arrangement for the supply of household electricity is that the household simply buys electricity from the NEM grid. In the past 20 years, this has changed significantly with the introduction of rooftop solar panels for households. Households could now generate and use their own electricity. If they had a surplus of solar energy generated from the panels they could sell that back to the NEM grid at a specific feed-in tariff, and if they had a deficit they could buy from the NEM grid (at the going market rate). The previous one-way purchase of electricity from the NEM grid had now changed into a two-way system of sales and purchases of electricity from the NEM grid (note that “households” in this description refers to any property able to generate and consume electricity e.g. farms, small business etc)

More recently, and still a developing market, some households have installed batteries at their house, so that any surplus solar electricity (during the day) could be stored in their battery (rather than being immediately sold back to the grid at the feed-in tariff), and then used later in the day when there was a deficit of solar energy (this avoiding the purchase of electricity at the market rate, which is higher than the feed-in tariff). Self-consumption of solar energy is now a much better economic proposition than selling it back to the NEM.

The concept of a MicroGrid takes this idea of self-consumption one step further. Rather than limiting this self-consumption to the household that produced the solar electricity, it allows for trading of solar electricity between neighbouring households in the MicroGrid so that solar energy produced by one of the households could be consumed by another of the households, before any sales or purchase transactions occur with the NEM (Note that the buying household need not have any solar panels or batteries of their own).These MicroGrid transactions can potentially give a higher price to the selling household than the feed-in tariff they would receive by selling to the NEM grid, while simultaneously giving a lower price to the buying household than they would have paid if they had bought from the NEM grid. However, the full scope for establishing trading prices of benefit to the buyer and seller will only be fully realised when electricity distributors adopt a charging strategy that recognises the lower network costs of trading electricity locally rather than regionally or nationally.

Only after the MicroGrid trading opportunities have been exhausted (typically within a 30-minute trading period) do transactions occur with the NEM grid. For example, if all the surplus solar energy has been purchased by other lcoal MicroGrid households, and there is still unmet demand, then electricity would be bought from the NEM grid. On the other hand, if all demand from MicroGrid households had been satisfied and there was still surplus solar electricity, then this would be sold to the NEM grid.

The Taggerty MicroGrid project was underpinned by an extensive computer modelling exercise, to assist with sizing of the system components (e.g. how many solar panels and how much battery storage at each household) and with the development of an overall Financial Model for the total 20-year project. Even though the initial grant proposal was unsuccessful, the modelling exercise was very valuable and can be used to underpin other studies in this area.

The stages in the TMG modelling process include:

Energy Consumption

- this involves the determination of total daily energy consumption for each household, along with a Daily Energy Profile (i.e. percentage of daily energy consumption in each hour of the day), a Weekly Energy Profile (i..e any difference by day of week, especially weekday vs weekend) and a Seasonal Energy Profile (i.e. how does daily consumption vary across the seasons, or weeks of the year). For planning purposes, energy consumption has been fully modelled using Australian Government estimates of average energy consumption by postcode and household size, using the concept of Degree Days to estimate seasonal variations and Load Profiles to estimate hourly variations within the day. For implementation purposes, it is more likely that we will use detailed half-hourly transaction patterns for a calendar year for each household, with the data being downloaded from the AusNet data portal (https://www.ausnetservices.com.au/myhomeenergy).

Energy Generation

- the generation of solar energy from solar panels is modelled using mathematical models describing the capture of direct and diffuse solar radiation by time of day and day of year, for a solar panel installation at a specific location and with specific orientation and tilt of the solar panels. The total solar energy capture can be varied by changing the number of panels, and the costs and benefits of increasing the number of panels can be compared to indicate the optimal number of panels (within site, regulatory and financial constraints).

Excess/Deficit Solar Energy

- by comparing the hourly solar energy generation with the hourly household energy consumption, an estimate of hourly excess or deficit of solar energy can be calculated. Typically excesses will occur during the day and deficits will occur during the night.

Battery Storage

- excess solar energy will first be stored in batteries, while deficits in solar energy will first be met by drawing down the required energy from batteries. The costs and benefits of increasing battery storage can be compared to indicate the optimal amount of battery storage (within site and financial constraints).

TMG Sales/Purchases

- If there is insufficient battery capacity to store all excess solar energy, or to meet deficit demand by withdrawing energy from the battery, then selling and buying energy by trading within the TMG will be the first option. The balance of selling and buying energy within the TMG on a half-hourly basis will be calculated by the Retailer, to determine if the household is in credit or debit within the TMG over the course of a billing period (probably monthly).

NEM Sales/Purchases

- If the selling and buying needs of a household cannot be met within the TMG (e.g. the household wants to sell but there are no buyers within the half-hourly trading period, and vice versa), then transactions with the NEM grid will be the backup option, with buying and selling prices being those market rates in existence at the time of the transaction.

Environmental Evaluation

- the primary environmental impact of the introduction of the TMG will be a long-term reduction in greenhouse gas (GHG) emissions, as a result of substituting solar energy for fossil fuel energy. Initially, however, there will be an environmental cost as the solar panels, batteries and other equipment have an embodied GHG emission in them as a result of the processes involved in their manufacture. Therefore a breakeven analysis will be performed over the 20 years of the project to determine the net environmental benefit from introduction of the TMG.

Economic Evaluation

- similarly the economic evaluation of the project will be conducted on the basis of a breakeven analysis, where the initial capital cost of the project will be compared with the discounted time stream of net benefits arising from the project. From this analysis, estimates will be made of the expected Payback Period (PP), the Internal Rate of Return (IRR) and the Net Present Value (NPV) of the project over the 20 years of the project life.

Loan Repayment

- from the stream of project costs and benefits, an estimate will be made of the time required to repay the loan obtained for the purchase of the solar panels and battery storage. The Loan Repayment period is expected to be similar in magnitude to the Payback Period obtained in the economic evaluation above, but slightly longer to account for administrative and interests costs incurred along the way.