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Red tape a red flag for power innovation

This article was first published in an abridged format in The West Business on Monday 3 October 2016. 

 

By Simon Walsh
Executive Manager, Customer and Corporate Services

 

Can you imagine a shearing shed powered by solar panels? What about a town in outback Western Australia powered by a battery? At Western Power we can. In fact, we’re making it a reality.

Six pioneering farming families — our customers — are helping us trial a new way of providing electricity in remote areas – that don’t involve poles and wires. The trial on the outskirts of Ravensthorpe is important for our other roughly one million customers – like you. That’s because it’s one of the ways companies around the world such as Western Power are thinking about how to respond to massive leaps in technology which are putting more choice in the hands of customers than ever before.

Unfortunately red tape is standing in the way of giving customers even more of what they want. More about that later.

The trial near Ravensthorpe involves six battery-connected banks of solar panels backed by a small diesel generator. These so-called standalone power systems are big enough to power an average family house, shearing sheds and workshops. The units are not connected to the grid (or network of poles and wires) – but the grid is remaining in place for the period of the trial, to give the families a choice about their future power supplies.

But early indications are positive.

Amid one of the coldest winters WA has experienced in recent times, and in a location where locals know the sun doesn’t always shine, the units are mostly running without the need to resort to the diesel generator. In fact, more than 90 per cent of some families’ power needs are coming from the sun – day and night – with help from the battery.

Customers pay for their electricity as they normally would, based on use, but they get better reliability. 

What’s in it for Western Power you might ask? Aren’t we doing ourselves out of a job?

Not really, as this isn’t a solution for all parts of the grid. In fact, in most parts of WA’s South West we think it makes sense for our customers to remain connected so that they can share or trade electricity as a community and even make some money on the side.

But to enable greater choice and efficiency, we have to convince regulators – and customers – that the network is more than just poles and wires and Western Power is more than just being about the grid.  

Western Power’s modelling suggests that a net benefit of approximately $388 million in avoided expenditure is achievable by deploying standalone power systems to as many as 2,702 customers over the next 10 years, compared to replacing existing network assets in far flung locations.  And customers will experience better reliability. We’ll even top up the diesel for them, while we wait for even newer technology.

We are confident that these numbers will only grow over time. Of course, for the vast bulk of customers, there’ll be different technology (such as solar panels) that will work with the existing grid to help them save (and make) money if they choose to remain connected.

Why not just get on with it then?

Unfortunately, we are prohibited by certain regulations from providing bits of these units. Western Power isn’t allowed to be a generator, for example, under current rules. So that rules out the solar panels and the diesel generator. And even the question of whether a large battery is a generator or a storage unit is up in the air. We plan to roll out one of these industrial scale batteries in the township of Perenjori next year, to improve reliability. Rolling out more would depend on convincing regulators of the network that these are efficient, and worthy, investments.

In the short term, to get around these regulatory roadblocks, our friends at Horizon Power and Synergy are helping us, as is a local WA success story, Energy Made Clean.

Together we have created a solution for our customers in Ravensthorpe, but it’s the rest of our customers we are thinking about.

In the longer run, we will need more certainty. To this end, and with the support of the Energy Minister Mike Nahan, we’ve written to the national body that considers these matters, the Australian Energy Market Commission.

In a test case which will be closely watched by other firms around Australia, Western Power is proposing an expansion of the term “distribution service” under national rules. So rather than customers being serviced solely by traditional assets such as poles and wires, Western Power would be free to use new technologies including standalone power systems.

This wouldn’t prohibit competing private firms from offering services, but Western Power feels it has a compelling case at the moment because of the costly need to maintain existing assets in these remote areas.

The key benefit of the rule change will be to ability of network businesses and their customers to realise savings from previously out of reach least-cost investment opportunities, with the potential for enhanced service performance. It will also allow us and our customers to maximise the long-term use of the grid for those who choose to stay connected. This all ultimately places downwards pressure on prices, and is likely to improve customer experience for all our customers — connected or not.

Just as it’s impossible to turn off the forces unleashed by the internet, so too technology such as cheaper and more effective batteries are impossible to ignore. Western Power is embracing this technology, and wants to embrace it more, so that together, we all win.

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