We answer your questions about flexibility solutions and distributed energy resources (DER).
We believe the future for our energy system will see many players including customers, working together to contribute to, and manage, the electricity needs of our communities. Sharing available resources means we could defer or even avoid building more costly infrastructure, and instead, create new partnerships to help manage the electrification growth of our communities. We see our role as fundamental to helping drive Aotearoa’s decarbonisation goals, and to enabling the use of new technologies to support customer choices and innovation in the energy sector.
Flexibility Solutions are considered non-network solutions, as opposed to network solutions like poles and wires. They are distributed energy resources (DER), large distributed generation (DG), and flexible demand that can provide capacity and voltage support to EDBs like Aurora Energy. They can also provide support to Transpower (the national grid operator), such as responding to demand and providing instantaneous reserves for the national grid.
DER refers to Distributed Energy Resources. These are small-scale, distribution-embedded assets that either reduce load or inject more power like EV chargers, solar panels, batteries, or automated load management devices.
Controllable DER is where the output or consumption can be turned up or down based on demand – for example, batteries, hot water and smart EV chargers. Renewable generation like wind or solar is not normally considered controllable without a battery, but in some situations voltage control or generation curtailment can be considered controllable DER.
This can refer to a range of things, including existing household systems (like hot water) that can be controlled to reduce demand, or DER such as solar-battery systems, battery systems or electric vehicle chargers. Flexibility solutions can also be provided by commercial, dairy and industrial customers that can reduce or shift demand such as operational processes, irrigation, and cold storage among others. Flexibility Solutions could also be provided by large-scale distributed generation. Importantly, network support could be provided through the use of resources not listed here but proposed by those registering their interest.
Flexibility Solutions will usually be used during peak electricity demand, a network event (such as an unplanned outage) in an area and/or during low demand. It is often a more cost-effective alternative to building a network solution as it can be flexible to uncertain increases in demand, can defer investment in network infrastructure, or can avoid it altogether. It also increases the utilisation of assets.
During our tendering process for the Upper Clutha non-network solution, we found that going to market for alternatives can bring forward viable ideas not previously considered. It demonstrated that there is a role for Flexibility Service Providers to act as intermediaries between owners of Distributed Energy Resources (Flexibility Resources) and the distribution network owner (Flexibility Buyers, like Aurora Energy). However, given it is a new market, we didn’t want to limit the time for any interested respondents to propose ideas and as a result, create barriers to entry. An open call process allows all those that are interested the time to review requirements, and decide how they want to proceed. It also allows multiple players the chance to contribute to a total solution, with the open call only closing when Aurora Energy has the total capacity required in an area.
Yes, we see the use of flexibility solutions as a critical part of our future network strategy. Therefore, where there are parts of our network that would benefit from the use of non-network alternatives, we will run an open call process to seek registrations, and proposals. We will open and close each process as capacity needs are met.
Their flexible nature has led to it also being referred to (internationally and locally) as Flexibility Services or non-network support.
In short, yes. It is important all potential parties can get involved and help grow this new market offering.
Flexibility Service Providers can participate in the wholesale electricity market or Transpower’s demand response if Aurora Energy’s requirements can still be met as agreed. This maximises value of flexible solutions to both customers and Flexibility Traders. This also increases the attractiveness of entering the market with demand flexibility.
A Flexibility Management System (FMS) or Distributed Energy Resource Management Solution (DERMS), refers to a system that allows the flexibility buyers (companies like Aurora Energy) to forecast and respond, procure, manage, contract for, issue instructions to, and pay Flexibility Traders.
A market platform is how Flexibility Buyers and Flexibility Traders interact. A Flexibility Buyer registers the need for flexibility solutions, for example, when, where, and how much capacity. Flexibility Traders can register and offer their flexibility solutions.
Aurora Energy’s standard distribution pricing includes Time-of-Use (ToU) tariffs that enable retailers to offer night rates and peak demand prices to incentivise efficient DER management. We intend to complement standard distribution pricing with additional payments to Flexibility Traders who can discharge batteries, run distributed generators, or shift peak demand in response to Aurora Energy’s requests for network support during critical peaks on the system.