Virtual ‘big battery’ proposes to get South Australia’s grid out of hot water

South Australia’s 200,0000-odd residential electric hot water systems could be transformed into a massive virtual battery to store the state’s cheap and abundant solar during the day and help solve grid stability problems.

Under a proposal put to the South Australian government by NSW-based firm Intellihub, residential smart meters would be used to dynamically control hot water systems, turning them into a sort-of solar sponge at times of minimum demand – often when solar generation is highest.

This would offer benefits for consumers, including saving them money on energy costs, while also taking pressure off the grid by providing enough combined demand at the right times and locations to help maintain the stability of supply.

Intellihub says the creation of a hot water virtual power plant could also provide a new platform for retailers to develop innovative consumer-friendly products, offering improved services and better control over energy costs.

The proposal comes as both the South Australia government and the Australian Energy Market Operator scramble to find ways to better accommodate the state’s world-leading distributed solar uptake, and avoid the need to take measures such as switch off large amounts of rooftop PV.

That sort of “last resort mechanism” was flagged by AEMO in its Minimum Operational Demand Thresholds in South Australia Review, handed to the state government in May, and released publicly in June.

The report noted that zero operational demand – where rooftop solar reaches the point where it effectively eliminates grid demand – could occur within the next one to three years and, unless AEMO has new powers to manage rooftop solar, presents a real danger of a major blackout.

As RenewEconomy editor Giles Parkinson explained here, AEMO has long planned a “roadmap” to introduce new standards, new technology and protocols to manage this growing resource, but the looming “zero demand” benchmark has forced it and the state government to fast-track their response.

And while AEMO has some near-term tricks and band-aid solutions up its sleeve, the South Australian government is doing its bit to find remedies through a Smarter Homes consultation on minimum demand solutions – the prompt to Intellihub’s proposal.

“Our proposal supports the use of energy rather than the loss of energy to help maintain grid security across South Australia,” said Intellihub CEO Adrian Clark in a statement on Monday.

“With intelligent scheduling and staggering enabled by smart meters, these systems can deliver a continuous aggregate demand of 200-300MW to help maintain grid stability when solar generation is highest.

“It works exactly the same way as a battery, soaking up energy when required, and releasing it when it’s needed. It creates value for consumers and the energy market, rather than eroding value.”

Realising these benefits would require some significant groundwork to be laid, however, including the installation of smart meters at around 140,000 homes with electric hot water services.

But in a state that is so far ahead on renewable energy uptake, this is almost certainly something that should be happening for all households, with or without electric hot water.

According to Intellihub, of the almost 1 million electricity meters in use across South Australia, only around 30% are “smart”, around 300,000 are analog accumulation meters that are more than 25 years old. And some are estimated to be more than 70 years of age.

It is believed that this is one of the reasons why the shift to the “solar sponge” has not already happened. It has long been recognised that the huge jump in demand, late at night, as the state’s electric hot water systems are switched on at the same time, has been an issue that needs to be resolved.

“These meters are getting older and less reliable. They’re not fit for the 21st century problems associated with high penetration of renewable energy feeding into the grid,” Clark said.