What is a smart energy device?
Smart energy devices include solar PV systems, battery storage systems, smart air conditioners, smart pool pumps and larger equipment like smart building energy management systems.
What makes them smart is that they can help their owners to manage their electricity use. This help might include reducing consumption from the grid at peak times, cycling the pool pump or air conditioner to reduce consumption at peak times, switching the battery from charge to discharge to take advantage of higher prices, or using smart software to coordinate high-load appliance operations like dishwashers, dryers etc.
These same smarts, combined with communications capability, can also provide energy services that contribute to a more sustainable grid. A number of energy services can only be accessed through participation as part of an aggregated group. This is where smart fleets, virtual power plants and aggregators become important.
What is a smart fleet?
Like a fleet of cars, when considered as a group, smart devices can also be thought of as a ‘smart fleet’. A smart fleet is generally the same type of technology (eg. a smart residential battery fleet), if not the same product entirely (eg. inverter brand X’s residential battery fleet). Being part of a fleet suggests that there is an agent that has some ability to contact owners, coordinate their activities and/or respond on behalf of the entire fleet.
What is a virtual power plant, or ‘VPP’?
Similar to a smart fleet, a virtual power plant (commonly called a “VPP”) is a group of controllable devices that can be coordinated in a similar way to a power plant. Controllable devices can include smart batteries, smart solar PV, smart pool pumps, air conditioners all the way up to commercial generators and building energy management systems.
A VPP is virtual in that the group of devices are likely to include multiple types of technologies that vary in size (capacity), are geographically distributed but are all able to connect and communicate to a virtual platform where they are represented and can be called on to participate in energy or grid services. These calls to participate will happen in response to particular market conditions such as high prices, peak demand, low demand, frequency support etc.
In addition to the devices enrolled into this virtual power plant, a “VPP” will include:
- a VPP operator – a licenced market participant, such as an electricity retailer; and
- a VPP platform – a software layer where the group of assets are aggregated and represented in the software layer and can be coordinated by the VPP operator.
How do virtual power plants work for smart device owners?
Smart device owners can choose to join a VPP to access savings and additional value for the services that their devices can provide. By joining a VPP, homeowners can be rewarded for sharing access to their smart device with the VPP operator (the retailer) and for the times that their device provides services as part of the VPP.
What’s an aggregator?
An aggregator is a type of energy service provider who has permission to:
- manage the energy consumption of a group of customers, and/or
- manage energy generation on behalf of a group of customers by selling the excess electricity they produce on their behalf.
These activities can be done by retailers or independent aggregation businesses. Today, independent aggregation service providers are mainly active in the commercial and industrial customer scale. At the residential level, electricity retailers are more likely to provide services on behalf of their customers; provided they have the customer’s explicit informed consent.
Can an electricity retailer be an aggregator?
Yes. An electricity retailer can also undertake all the activities of an aggregator. Under Australia’s electricity rules for residential customers’ participation in market activities (including via VPPs), an electricity retailer must act as the agent for the customer.