12 September, 2015
Advances in technology are fundamentally transforming the way in which energy services can be provided, and are allowing services to be provided more efficiently. Standalone power systems, for example, use a mix of different technologies to allow individual customers continuous energy supply without the need for grid connection. Microgrids use intelligent technologies to enable consumers to become ‘prosumers’ and actively generate and trade power on a controlled platform that ensures continuous energy supply to a group or community of customers. Microgrids are expected to be particularly cost effective for small, remote communities that are currently rated as ‘high-cost customers’ relative to those located in larger towns. Synergies was engaged by Horizon Power to examine the scope for distributed energy resources and microgrids to create new economic opportunities for small and remote communities in northern Australia.
Microgrids are currently being explored as cost effective installations for small, remote communities in Northern Australia. In addition to cost-savings for a utility such as Horizon Power (which receives a subsidy from the WA government to services these communities), having access to lower cost energy could provide opportunities for remote communities to grow their local economy.
The emergence of microgrid technologies may also make it feasible for other essential services to be delivered at a local level. Instead of having multiple government agencies involved in supply of services, efficiency gains could be achieved through a single service provider – leveraging off the institutional arrangements developed for the microgrid. Potential services that could be delivered through this model include water and wastewater services, plumbing services, as well as telecommunications, gas and other infrastructure-related services.
Horizon Power engaged Synergies to further investigate the economics of these opportunities.
Synergies delivered three outputs to Horizon Power to assist it in early stage business development research into the opportunities associated with microgrids.
First, Synergies drew on developing country literature to assess the key factors and pre-conditions for economic development in poor and remote communities. We used this framework to examine the extent to which microgrids could present opportunities for communities to participate in power generation and establish new businesses, thus lifting local incomes and employment.
Second, a number of different models were identified for deploying microgrids in remote communities, characterised by differing degrees of local engagement in energy supply chain.
Third, the suitability of these models for particular community types was assessed and guidance provided on how to match models to communities best able to engage with them.
Four different models were identified by Synergies for deploying microgrids to remote communities. The models are differentiated from one another based on the commercial and institutional arrangements by which electricity is supplied and the extent to which a community can participate in the microgrid.
There are likely to be many variants around the four models examined in the report. However, our aim was to present a suite of models that are distinctively different from each other and that can be matched to a community of a particular type, defined by set of characteristics.
The models also provided a means of identifying how microgrids could yield measurable economic benefits for remote communities.
The report demonstrated that there is a strong, ‘in principle’ case for deploying microgrids and distributed energy resources to remote communities. However, the extent to which a community will capitalise on the opportunities presented by this new technology will depend to a large degree on a town’s complement of natural assets, proximity to market, and the community’s entrepreneurial skills.