Is Australia ready to orchestrate distributed energy resources?

The transition from chaos to choreography can reduce costs, protect the grid and reward customers at the same time.

In brief:

• Distributed energy resources (DER) already generate nearly 10% of Australia’s electricity.
• As that percentage grows, DER must be orchestrated to reduce costs and grid impacts. Action by energy suppliers and regulators could build trust, shared understanding and consumer confidence.

Australia is at an inflection point. We need to decarbonise our energy system to lay the foundation for Australia’s future prosperity, capture our low-carbon superpower opportunity and meet the Australian Government’s target of 82% renewable electricity by 2030. We need more solar and wind farms, more batteries and storage, and more transmission lines.

Australia already leads the world in the uptake of solar panels. Households and businesses are embracing distributed energy resources, known as DER, at an unprecedented speed and scale – including rooftop solar, batteries, electric vehicles and smart appliances. But simply increasing the amount of DER is not enough.

To truly tap into the value of DER, we need these assets to be orchestrated in a way that helps rather than hinders the energy system. And to do this, we need a step change in trust and shared understanding across energy customers and providers.

The latest paper from EY, part of our Energy Infrastructure Executive Briefing Series, explores what this new approach might look like. From chaos to choreography outlines the case for orchestrating distributed energy resources and how to achieve it.

Simpler is better for confidence and participation

The Australian Energy Market Operator’s (AEMO) Draft 2024 Integrated System Plan (ISP) forecasts DER to reach approximately 120 GW by 2050 across rooftop solar and storage, This means DER will be the largest source of capacity – more than utility scale solar, utility scale wind and dwarfing most other sources of electricity capacity.

AEMO’s forecasts assume that at least 27 GW of this DER – around 22% – will be ‘dispatchable’ consumer energy resources, such as batteries and electric vehicles, that can be turned on, off, up or down to keep the system in balance.

Source: AEMO, 2023, Draft 2024 Integrated Systems Plan

This makes customers’ DER assets central to the energy transition, both in meeting their energy consumption needs and in how they act as a dispatchable resource. But the energy industry is renowned for low levels of trust, customer understanding and confidence. How do we create the trusted relationships Australia needs to accelerate the energy transition?

EY research suggests Australian energy consumers are facing a period of reduced confidence – and this has the potential to derail clean energy ambitions and net zero targets.

Energy retailers and aggregators can build trust by eliminating confusion and fragmentation, and by developing products that deliver value to the customer. The 2023 EY Energy Consumer Confidence Index finds that 75% of Australian consumers want to work with their energy provider to access new energy opportunities. Acting as a single trusted advisor to eliminate complexity is a powerful way to build trust.

But customers must also step up to play their part in the energy transition. Australian consumers’ engagement with the energy market is currently low – and we are relying on that to change.

The reforms to achieve orchestration at scale have begun, for instance with network pricing and dynamic connection agreements. But there is more to do. Grid-interactivity and orchestration must be woven into the fabric of the energy customer’s experience, so that it is understood, then trusted, and soon becomes second nature.

This will require the development of simple, attractive, customer-centric offerings that unlock the value of DER for everyone – including households that own DER assets, and households that are not in position to invest in these.

Action now can establish reforms that support energy system orchestration that is fair to all and in the best interest of the nation.

Given the challenges to rolling out large-scale generation and transmission projects, investments to accelerate DER uptake and orchestration could make DER the hero in meeting net zero.