Renewable energy and energy efficiency in Victorian Energy

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Renewable energy and energy efficiency in Victorian Energy

Transcript Of Renewable energy and energy efficiency in Victorian Energy

Renewable energy and energy efficiency in Victorian Energy Upgrades
Incentives to integrate renewable energy, energy efficiency and demand management

The Victorian Energy Upgrades (VEU) Regulatory Impact Statement (RIS) considers a range of options to increase the range of incentives to meet the 2021 to 2025 targets for the program. Options 2 to 5 all include new incentives for renewable energy, where gaps in existing available incentives had been identified.
The RIS determines there is a need to continue existing incentives for PV solar systems and also considers new incentives:
• For PV solar systems generating more than 100 kilowatts (kW) of energy that are set up to export to the grid,
• For load management technology that optimises the use of solar to maximise the amount of renewable energy used onsite.
Why consider renewable energy?
Along with energy efficiency, renewable energy is one of the most cost-effective ways to reduce emissions. International, national and state policies in conjunction with technological progress have led to a significant transition to clean energy.
In addition to the carbon saving, on site renewable energy generation also creates a substantial opportunity to reduce the amount of electricity drawn from the grid and reduce energy costs for consumers.
Australia already has the highest per-capita deployment of distributed PV in the world. For some businesses, it makes commercial sense to invest in solar panels even without incentives. However, incentives can significantly

expand the number of installations beyond the business-as-usual uptake.
Additionally, incentives can ensure systems are installed in a best practice manner and drive innovation in how renewable energy is used by Victorian businesses.
Support for renewable energy in Victoria
Victoria’s largest emissions reduction policy in the energy sector is the 50 per cent Victorian Renewable Energy Target (VRET) by 2030. In 2017, 17 per cent of Australia’s energy and 16 per cent of Victoria’s energy was from renewable sources. In 2018/19, this had increased with renewable sources providing 21 per cent of power generation in both Victoria and the National Electricity Market.
Support to meet the VRET includes the 2017 Victorian renewable energy auction (a competitive reverse auction for 928 megawatts (MW) of large-scale renewable generation capacity) and the Solar Homes which will invest $1.33 in small-scale rooftop photovoltaic (PV) systems over ten years. The government also sets a minimum feed-in tariff rate for systems under 100kW.
There is currently minimal support for businesses contemplating the installation of solar photovoltaic (PV) systems larger than 100 kW on their roof (to reduce the energy they are required to purchase from the grid).
The Commonwealth’s Small-Scale Renewable Energy Scheme (SRES) supports the installation of systems

Renewable energy and energy efficiency in Victorian Energy Upgrades

under 100 kW. Grid-scale systems over 10 MW were eligible to participate in the 2017 VRET auction.

Solar Homes

Commercial (<100kW)

Commercial and
Industrial (>100kW)


VEU or

Grid-scale (>10MW)
2017 VRET auction

Feed-in tariff

Feed-in tariff



*Sufficient renewable energy has been built to meet the LRET target for 2020.
Systems larger than 100 kW are eligible to participate in the Large-Scale Renewable Energy Target (LRET); however, the value of the LRET incentive is predicted to drop dramatically in the next few years because projects have already been locked in to deliver the majority of the remaining target, and the Commonwealth government has not expressed an intention to extend the target.
Renewables in Victorian Energy Upgrades
The Victorian Energy Upgrades (VEU) program provides incentives for energy upgrades that save energy and reduce greenhouse emissions from energy use.
Since the program commenced in 2009, VEU has supported the installation of solar water heaters. With the introduction of Project Based Activities (PBA) and the Measurement and Verification (M&V) method of calculating emissions under it in 2017, this support for renewables was expanded to include behind the meter renewables (as long as they are not set up to export to the grid) and bioenergy. To date, the M&V method has provided incentives for several renewable bioenergy projects.
The RIS proposes an expansion of the program’s focus on renewable energy. The RIS proposes new incentives for:
• Solar PV systems of this size (100 kW+) that export to the grid, and
• Solar optimisation upgrades that promote use of this solar energy onsite.

Solar optimisation upgrades
Solar optimisation upgrades (SOU) maximise on site consumption of electricity generated by PVs and reduce grid-supplied electricity consumption outside of daylight hours. Reducing grid electricity consumption reduces total emissions because the grid electricity is largely generated by non-renewable power stations.
On-site solar generation can be installed together with a variety of other products (together referred to as SOU) and energy efficiency products to optimise the use of the solar energy on the site. These packaged upgrades work as follows:
• Solar panels are installed to generate solar energy in the middle of the day.
• Demand management software and products are used to shift the energy usage of the site to the middle of the day, where possible, and the solar energy generated onsite is directly used to satisfy this demand.
• Energy efficiency upgrades reduce this demand as much as possible.
• Storage products such as batteries, thermal storage (hot water tanks or refrigerated storage), are used to capture any unused solar energy produced in the middle of the day.
The energy stored during the day is then discharged once the sun has set, to power the remainder of the site’s needs.
Research suggests that the combined installation of solar PV optimisation measures with PV panels may lead to more optimal use of on-site PV and therefore supports the installation of optimal-sized PV panels. This is demonstrated by Figure 1 below.
Figure 1 (user perspective) and Figure 2 (grid perspective) show how once a SOU is carried out, the onsite energy demand is shifted to match the solar generation curve. This minimises energy imports/ exports to the grid, which reduce the business’ bills. It also creates a flatter, more manageable load for the electricity grid to manage. See Appendix 8 of the RIS for more information.
Solar optimisation upgrades can significantly reduce demand on the grid, including during peak periods. By optimising use of renewable generation onsite, they increase the total amount of renewable energy used by Victoria without requiring upgrades of and investment in the distribution network, for instance to manage local voltage or thermal constraints.

Renewable energy and energy efficiency in Victorian Energy Upgrades
Figure 1: Illustrative example: Solar optimisation used to align onsite energy demand with peak solar generation.
Figure 2: Illustrative Example: Energy demand from the grid before and after SOU (battery storage peak optimisation) - peaks have been shaved, reducing demand charges and solar export to the grid.

Renewable energy and energy efficiency in Victorian Energy Upgrades

Solar optimisation represents a cost-effective option to assist the integration of distributed energy resources as part of Victoria’s energy transition. A co-benefit of solar optimisation upgrades is that they generally make loads flexible. Flexible loads provide additional benefits to the network by providing demand response to the grid, such as emergency and ancillary services. That in turn increases the value stack for businesses investing in these technologies.
While this type of demand-side flexibility is essential to both maximise the value of solar PV to commercial and industrial (C&I) businesses and facilitate its seamless integration with the electricity network and market, it is not commonly leveraged by Australian consumers, including C&I businesses. There is agreement amongst a wide range of Australia’s energy market institutions that there is significant untapped potential for low-cost load flexibility to improve efficiency, security and reliability of our energy system.
As noted in Appendix 8 of the RIS, the inclusion of incentives for solar optimisation in VEU is a first step in utilising load-flexibility technology for solar PV. The proposed incentives will support Victorian businesses to achieve best practice integration of demand management and PV systems, and position them as ready for further opportunities in the energy transition and the emergence of a two-sided energy system.
Potential PV optimisation upgrades
As part of the work setting the VEU targets for the 2021-25 period, the range of prescribed upgrade activities that can be carried out under the program has been expanded and is proposed to include ‘PV optimisation’. These upgrade activities combine smart devices, equipment and operation regimes that maximise self-consumption of on-site generated solar power and reduce grid electricity use. These upgrades will be able to be implemented as part of the PBA but new deemed activities (which provide pre-calculated upfront incentives) may also be developed for the residential, commercial or industrial sectors.
Potential PV optimisation upgrades include:

• Use of automated pre-cooling or tuning of heating, ventilation and air conditioning (HVAC) systems to use a higher proportion of PV energy
• Use of thermal inertia in refrigeration systems to store excess generation from solar PV
• Use of cold-water storage system to store excess generation from solar PV
• Automating water heating and space heating/cooling to use a higher proportion of PV energy
• Use of battery to store excess generation from solar PV for use outside daylight hours.
To make a submission on the RIS
Submit comments by 31 January 2020 on
January 2020

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