David Naismith sold Solgen Energy to AGL back in 2021 when it was the largest developer and integrator of commercial PV projects in Australia.
Now, he’s focused on another technology that he says is set to be the “industrial revolution all over again” but for energy.
Naismith is now the chief executive of energy tech company PowerSync Technologies.
He tells The Fifth Estate that for around a decade, he’d been thinking about the two biggest issues in the Australian energy market – the intermittency of supply from solar and uncontrolled demand on the part of energy users.
Kicking off PowerSync in 2022 was his way of offering a solution to both challenges simultaneously.
The big need is for transparency, he says. That means having visibility of demand, spot pricing, and energy resource availability in real time.
Then, it becomes possible to manage demand in response to the market and use batteries and other technology effectively to ensure supply.
“We don’t need to gold plate the grid, we need to give businesses power to see what’s going on,” Naismith says.
This kind of thinking might please keen agitators for better “time of use” practices, such as Craig Roussac of Buildings Alive.
From rooftop to the grid
The new company has developed two business streams.
The technology is a digital platform that uses smarts to integrate energy production, storage and energy-using assets into virtual power plants.
The other business stream is PowerUp, which manages the procurement of renewable energy assets via ownership or leasing arrangements. It also brokers deals between owners of existing renewable technologies and the market being created by the software platform.
The basic way the VPP works is through leveraging energy arbitrage to generate revenue while also supporting the stability of the grid and reducing the risks associated with peak demand events. The arbitrage function means energy users are purchasing most of their power at lower, off-peak rates, then selling any excess capacity from solar or batteries into the grid when peak pricing is in effect.
It also enables a better match between the output of consumer energy resources, which tend to generate the most energy during the middle of the day, and the peak demand periods of first thing in the morning and early evening.
“When everyone has the air conditioning switched on because it’s 40 degrees, and everyone is at work, (the grid) either needs to have load shedding or it needs to dispatch more,” Naismith says.
The platform enables participants to rapidly respond to a request for increased supply or to initiate trimming of demand and then dispatch the difference.
“It is very valuable technology because we need capacity in the grid.”
Participating in the NEM
The company has obtained energy trading permits for the National Energy Market for every state and territory.
Naismith explains that in addition to facilitating the sale of generated PV or stored energy from batteries, the platform also enables large energy users to participate in AEMO’s frequency control ancillary services market.
Previously, AEMO would generally request the nation’s largest energy users, such as aluminium smelters, to make capacity available for between eight and 12 frequency control events a year. The platform, however, enables aggregation of smaller participants who can then access the revenue stream.
Naismith says that for his business, the focus is on large commercial energy users.
RACV launches VPP with the tech
One of the first major customers was RACV, which partnered with PowerSync to launch the first virtual power plant (VPP) product for business customers at the start of this year. It has also installed VPPs on its resorts at Torquay and Inverloch in Victoria, and the VPPs will participate in the FCAS market.
“By installing a virtual power plant at our resorts, we have been able to realise a range of commercial benefits such as managing energy costs and generating revenue, at the same time as contributing to grid stability by feeding energy back into the grid during periods of high demand,” RACV general manager energy services Greg Edye said
“We are pleased to now be offering our VPP product to our commercial and industrial customers.”
Lease, buy, earn
Naismith says the company can also provide a staged way for asset owners or businesses to install their own VPP.
For example, if a manufacturing facility installs a megawatt of solar PV ahead of electric machinery being brought in, then participating in the energy market can hasten payback and help fund a battery.
Or, they can lease the technology for zero upfront and cover the lease fees out of the revenue PowerSync gets from the energy market.
Naismith estimates that the overall cost for a large energy user that plans to increase its overall demand due to electrification is likely to be far less than the capital outlay required for a connection upgrade to increase overall electrical supply capacity.
Overall, the payback on a battery install that is connected to the energy market would be around four to five years, Naismith estimates.
Most come with a warranty of around 15 years, so that’s potentially a decade of cashflow positive energy asset.
“Batteries are the Swiss Army knife of energy,” Naismith says. “They can do everything, including providing firming and stability.”