Up to 200 dairy farms, more than 100 households and 20 local businesses in the Latrobe Valley could share the output of solar energy as part of a “virtual micro-grid” being put together by Brooklyn-based company LO3 Energy.
The project has received funding from Australian Renewable Energy Agency, and will look to use locally generated solar, battery storage, smart appliances and blockchain technology to buy and sell locally produced renewable energy.
LO3, which developed the famous Brooklyn micro-grid in New York, and set up shop in Australia nearly two years ago, has developed a peer-to-peer trading platform known as Exergy which can be used to share the solar generated and stored by consumers.
On its website, LO3 says Exergy encourages the “democratisation of energy”, allowing consumers to be the new energy “producers”. It is significant that this is happening in the heart of Victoria’s brown coal province, and its massive centralised generators.
“This is a landmark project for us and the Australian energy industry as it combines a number of our innovative technologies to optimise the use of renewable energy,” said Lawrence Orsini, the founder and CEO of LO3.
“As the economy decarbonises and coal generation continues to be retired, wind and solar will increasingly enter the market – but their intermittent generation has created a need for new ways to store and manage energy,” he said.
“This microgrid will showcase solutions for this including battery storage to make greater use of solar energy and demand response in which consumers will be paid for choosing to conserve energy at peak times.”
The study is yet to be done, but initial estimates suggest that each dairy farm could, on average, support around 80kW of solar an 25kWh of battery storage, making a 16MW micro-grid from the dairy farms alone – one of Australia’s biggest.
Households are also expected to have solar and storage, as well as smart devices to help manage their usage, and an “internet of things” based marketplace.
The 200 or so dairy farms will be able participate at no upfront cost through loans provided by the Sustainable Melbourne Fund, and repaid through council rates. Other partners include local network operator Ausnet, Dairy Australia and Siemens.
The use of peer-to-peer trading in a micro-grid is a new but welcome development in Australia, where restrictions have limited the ability of consumers to sell excess output from the rooftop solar, or other behind the meter installations, to neighbours.
It normally has to be sold back to the retailer, who then on-sells it to other users at a significantly higher price. However, the use of blockchain technology enables clear visibility over the details of such transactions, and big utilities now understand that virtual micro-grids are an inevitability.
ARENA CEO Ivor Frischknecht said the feasibility study would be the first trial of a blockchain-based virtual microgrid in Australia.
“With significant increases in distributed energy resources across the network, there is an emerging opportunity to optimise these systems through orchestration,” he said in a statement.
He said the ‘virtual microgrid’ concept leaves control with the customers, rather than retailers, and they can choose to opt in depending on the current prices and energy types, or their willingness to provide demand response.
A large focus of LO3’s project will be on the ability to capture the benefits from avoided network investments combined and optimising energy consumption.