Canary in the Sunshine: Australia is showing the rest of the world what a modern grid looks like
Project EDGE is setting the standard for a customer-centric grid architecture that maximizes the value — and impact — of distributed resources
“Customers don’t want kilowatt-hours; they want… hot showers and cold beer.”
Amory Lovins’ famous quip highlights a paradox of the global energy transition: although hardly anyone gives a second thought to the machinations of the grid, consumer behavior is perhaps the most significant force transforming the electric utility industry.
Each year actual adoption of electric vehicles, flexible loads, rooftop solar arrays, battery storage systems, and other DERs exceeds even the most bullish of predictions. Transitioning to a decarbonized, distributed electricity system seems less like a wicked problem and more like an irreversible trend.
Case in point: the Ford F-150 Lightning. When the best-selling vehicle (a pickup truck, no less) in the most car-crazy country on Earth turns into a 180 kWh power plant on wheels with the ability to provide full-home backup power for over a week, distributed energy has officially gone mainstream.
There is no doubt that an ever-growing fleet of DERs represents a massive opportunity to improve resiliency, lower costs, and reduce carbon emissions in grids across the world. Yet even as DERs get cheaper, more powerful, and more plentiful, they remain chronically underutilized.
Regulations like FERC Order 2222 and frameworks like Integrated TSO/DSO Coordination have been developed specifically to address this challenge and tap into burgeoning DER resources in the US and Europe, respectively. Yet while FERC 2222 is ostensibly designed to remove barriers to DER participation in all energy markets, it has caused much hand wringing, delayed regulatory filings from every major ISO / RTO, and as yet, no tangible results. In Europe, progress on TSO/DSO coordination isn’t much further along. Despite plenty of excellent work on conceptual frameworks, hesitation remains amongst grid operators (and regulators) to lean into the transition.
Why? By and large, incumbents are focused on solving the wrong problem. Too often, the assumption is that the key to unlocking the full potential of DERs is some sort of optimization: How can we perfectly utilize lots of small-scale, flexible assets to balance the variable nature of large-scale renewables like wind and solar? That work is important, but it’s not the real barrier to redesigning our grids’ architecture and toolsets. Focusing on DER optimization is like debating the merits of Gmail vs. Apple Mail vs. Microsoft Outlook before you’ve solved a more fundamental issue: how to send and receive email through a common, narrow waist protocol.
Before we can optimize DERs, the grid needs its own equivalent of SMTP — an open protocol through which DERs of all shapes and sizes can seamlessly exchange data and integrate into markets. The solution may not be easy, but it is surprisingly simple: there needs to be a shared view of DER attributes, relationships, and behaviors across all participants so each can perform their respective function. Just as the physical grid evolved over a century ago, the best way to achieve this is through shared, public digital infrastructure, rather than leaving it up to individual companies to manage independently. We can all move better and faster when we move together.
To see the answer in action, look to Australia.
Australia’s National Electricity Market (NEM) is at the bleeding edge of the distributed energy world, and it’s only getting more advanced in the coming years. With the highest per capita penetration of solar PV in the world, an incredibly mature storage market, a host of EV incentives, and greatly expanded opportunities for demand-side market participation, Australia is on pace to get nearly half of its electricity from DERs by 2040.
In a deregulated energy market like the NEM, there are lots of proverbial cooks in the kitchen. For any given customer who owns rooftop solar or storage, there’s a long list of stakeholders, including the DER manufacturer (or “OEM”), the DER installer, the local distribution utility (Distribution Network Service Provider, or “DNSP”), their energy retailer, perhaps an aggregator, and of course the Australian Energy Market Operator (AEMO).
Each of these parties, including the customer themselves, is interested in the DER for different reasons. The customer might primarily care about how the DER delivers comfort or economic benefit, the OEM cares about operational performance and warranties, the DNSP cares about the DER’s impact on network congestion, the retailer on tariffs and/or wholesale market exposure, the aggregator on its impact to deliver grid services or optimize its DER portfolio, and AEMO cares about its contribution (or lack thereof) to the aggregator’s portfolio delivery.
Today each of these stakeholders operates more or less in their own separate world with limited, if any, information about the others. Typically, the information each stakeholder has about the DER and its influence on their domain is protected; sharing is not encouraged and customers need to register separate accounts with each entity. This presents a number of problems.
The primary revenue opportunity for DER owners is providing one or more services in the NEM wholesale market via an aggregator. As more aggregators enroll more DERs into more services and markets, the collective impact on the distribution network can be detrimental if DER behavior is not informed by physical grid constraints. Even though they manage interconnection requests, the DNSPs don’t ordinarily enroll DERs to use for local services, so they don’t monitor or manage their behavior on an ongoing basis. Yet most customers would happily enroll in complementary local services programs for DNSPs to maximize their revenue potential.
So we currently have markets where participants often act in operational silos, and DERs are not utilized to their fullest potential. Data exchanges, where they exist, are accomplished through bespoke point-to-point integrations between each participant’s system. Maintaining alignment across all their systems, managing access and permissions, and establishing relationships is extremely costly relative to the value of any given DER.
Project EDGE: Overcoming the Barriers of Legacy Data Exchange
In Project EDGE, Energy Web (EW) is working with AEMO, AusNet (a key DNSP), and Mondo (a large aggregator), to build a shared infrastructure for establishing identity, roles, and permissions for all market participants. Instead of the bilateral point-to-point integrations, we’re building a hub and spoke architecture in which each participant’s IT system integrates with a common, shared data exchange solution. In other words, the hub isn’t unilaterally controlled by any single party; rather, it’s built using EW’s Decentralized Operating System (EW-DOS), which allows every single market player to participate by hosting nodes (i.e., servers) that facilitate data exchange between all parties’ internal IT and OT systems. It provides a shared, trusted view of identity, relationships, and permissions for different actors and components within the system. EW-DOS also streamlines message exchange, and allows AusNet (the distribution utility), and AEMO (the wholesale market operator) to coordinate on the utilisation of DERs simultaneously across local and wholesale services.
In EDGE, all participating organizations and DER assets are given a unique digital identity via decentralized identifiers, or DIDs. DIDs not only contain information about the physical location and attributes of DERs, but also define relationships (e.g. mapping a given DER to a specific aggregator’s portfolio) as well as roles within the EDGE marketplace (e.g. permissions to send/receive, or read/write certain types of data).
On the aggregator side, DIDs act as a common anchor point for enrolling and operating DERs in multiple markets based on their technical capabilities and where they are connected in the distribution grid. On the grid operator side, DIDs help the DNSP pair enrollment information with actual, physical grid constraints — such as congestion or capacity limits on certain distribution feeder circuits — so AEMO can factor those constraints into wholesale market operations. In short, DIDs become the common currency — the narrow waist protocol — by which all parties develop a shared understanding of the system state and move forward from there.
DERs are interconnected physically to the grid. With EDGE, they are now also interconnected digitally to each other and to grid operators’ systems, unlocking a next wave of the energy transition. By leveraging a shared infrastructure, EDGE removes the traditional friction for identity verification and data reconciliation among aggregators, DNSPs, and AEMO. Being fully open source, there are no licence fees, which helps significantly reduce market operating costs, as well as competitive barriers for existing and new entrants. Having designed it to be protocol agnostic, the EDGE architecture is highly flexible, ensuring participants don’t need to reengineer their own systems to engage with it.
In the ongoing energy transition, decarbonization via renewable energy is an unstoppable runaway train. Meanwhile, decentralization — via connecting and leveraging low-carbon DERs at scale — is gaining major momentum due to growing investment by customers, and in part regulatory tailwinds from FERC Order 2222 and similar regulations. But despite their rapid growth, DERs too often remain islands unto themselves — myriad isolated outposts connected to the edges of the electricity grid, collecting data in siloed, private databases.
Before we can make use of that data to optimize DERs for local or system benefits, the grid needs a narrow waist protocol through which DERs can seamlessly and securely establish identity and share data amongst all stakeholders.
Grid operators from the U.S. and EU can and should look at what’s happening in the Southern Hemisphere with Project EDGE: DIDs anchored to public digital infrastructure provide the necessary on-ramp for DERs to be the integral grid-connected assets evangelists have been saying they are. What we’re building may be driven by the requirements of the NEM, but the open-source EW-DOS stack is directly relevant to any market looking for ways to better tap into DERs. If you’re a grid operator facing similar challenges or opportunities — however you want to look at it — come join us.