Buildings account for a significant portion of Australia’s and most countries’ annual emissions, mainly due to the burning of gas for water and space heating,
Project EDGE: Cost Benefit Analysis of DER Integration
Background - What is Project EDGE?
Project EDGE (Energy Demand & Generation Exchange) is a collaboration between the Australian Energy Market Operator (AEMO), AusNet Services, and Mondo with financial support from the Australian Renewable Energy Agency (ARENA). Project EDGE was established to further understand the consumer outcomes of greater distributed energy resource (DER) participation in the National Electricity Market (NEM). The goal of this innovative project was to design and demonstrate an end-to-end market arrangement that maximises the value of consumer DER and supports an energy market that can deliver reliable, affordable, and sustainable electricity to all consumers. Over the course of three years, Project EDGE undertook various field tests and research activities to demonstrate the viability of the proposed market arrangement. The final Project EDGE report detailing the findings was published October 25, 2023.
Cost Benefit Analysis - Methodology & Modelling
As part of Project EDGE, Deloitte Access Economics (Deloitte) and Energeia conducted a cost benefit analysis (CBA) to provide insights to energy market participants and policy makers. This analysis explored the economic benefits to consumers from increased DER integration in the NEM over a twenty-year forecasting period.
As a project partner, Energeia designed modelling methodology to identify the optimal consumer-focused future electricity system scenario. Energeia’s approach to developing and implementing this methodology involved:
- Developing consumer focused scenarios of the future: Energeia developed a consumer focused high DER and low carbon future scenario to compare with AEMO’s ISP Step Change scenario.
- Modelling the optimised future state for all customers: Energeia ran our customer optimisation and generation tools uSim and wSim to identify the least cost mix of DER, network, and generation over time.
- Identifying the key barriers and drivers to the optimal future state: Based on our learnings from the modelling, Energeia identified key barriers to the optimal future state and potential solutions.
- Developing the case for changing to the optimal future state: The modelling outputs were brought together in a whole-of-system model to compare the overall cost of each scenario’.
- Engaging, consulting, and validating with stakeholders and subject matter experts (SMEs): Energeia undertook multiple stages of stakeholder and subject matter expert consultation to validate key inputs, assumptions, results, and insights. Consultation included targeted stakeholder meetings, peer review of our methodology report, and stakeholder feedback on the final report.
Energeia also supported the development of the final cost benefit analysis using our proprietary Utility Simulator (uSim) and Wholesale Market Simulator (wSim) modelling platforms. Energeia’s results were published as a part of the Project EDGE CBA report on both AEMO and ARENA’s websites. The final report found that “all consumers stand to benefit from the accelerated and optimised integration of active DER via Virtual Power Plants (VPPs) in the NEM.”
For more information or to discuss your specific needs surrounding cost benefit analysis and market assessments, please request a meeting with our team.
For more detailed information regarding key challenges facing the energy sector today, please see Energeia’s Power Session webinars and associated materials.
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