Presentation title: Capacity firming provided by prosumer-owned solar-battery systems

 

Abstract: Electric power systems around the globe are undergoing a massive transition driven by the efforts to decarbonise the economy. In Australia, the transformation is remarkably rapid – due to the ever-dropping cost of renewable generation technology, coupled with the excellent availability of wind and solar resources and abundant land, all coal-fired generation will close by 2045, if not sooner. Replacing conventional fossil fuel generation with renewables is challenging due to the variable nature of wind and solar. Ensuring that sufficient supply is available to meet the demand at all times requires additional transmission infrastructure to increase the geographic diversity of wind and solar and firming resources to cater for still cloudy periods with insufficient renewable generation. The firming capacity can come from various storage technologies and gas generation. While these technologies are well understood, they are costly and often challenging to site.
 
Another alternative is to use the flexibility of distributed energy resources located ‘behind the meter’ in residential and small commercial buildings, an often unappreciated option. In more detail, the penetration of residential rooftop solar and batteries in the National Electricity Market is predicted to grow to 50GW and 40GWh, respectively, by 2050; this offers an unprecedented opportunity to use these resources to firm variable renewables. Within this context, we propose to use prosumer-owned solar-battery systems, solving the problem of cost and siting. Residential solar-battery systems are namely a consumer-financed resource, so using them for capacity firming does not increase the social cost. However, the private ownership also prevents the system operator from directly controlling residential solar-battery systems. We address this by proposing an operational model whereby at the bottom level, prosumers optimise the operation to achieve their private objective. At the same time, the remaining battery capacity is offered to the system operator to use for capacity firming. The problem is formulated as a bilevel optimisation problem where the optimality of the prosumer (lower-level) optimisation problem is embedded into the market operator (upper-level) optimisation problem as the set of optimality conditions, resulting in a single-level mixed-integer linear optimisation problem that can be solved efficiently using off-the-shelf solvers.

 

We demonstrate the performance of the proposed model using the retirement of the coal-fired power station Liddell as the case study. We show that using prosumer-owned PV battery systems significantly reduces the cost of providing capacity firming by reducing the need for gas-fired generation and utility-scale batteries.