Interest in microgrid (MG) has grown in Australia in recent years due to concerns about energy security and resilience in the face of bushfires and climatic disruptions, and federal government funding has been provided for 37 pilot projects across the country. However, the relative novelty of renewable MGs has limited past data to draw on, and knowledge sharing across projects remains informal, leading to a slow pace of growth. A recent study suggests that further research is needed to advance the understanding of MGs, particularly in areas such as sustainable business models, financing, and ownership structures, in order to support their mainstreaming and success.

The Australian study investigated the current state of microgrid development in the country, explore the constraints to their development, and identify the likely future developments in this field. The study found that ownership structures, business models, value streams, and financing opportunities are key factors in the development of MGs, and that community microgrids play a significant role in this regard.

Let’s dig a bit deeper:

Research rationale:

• The research aimed to investigate the current state of microgrid (MG) development in Australia, explore the constraints to this development, and show likely future developments.
• The study aimed to fill the gap in the literature that focused more on technical aspects of MGs and less on their management and commercial aspects.

Methodology:

• The researchers reviewed the literature on MGs in Australia and other countries to identify ownership structures, business models, value streams, and financing opportunities.
• They examined 37 pilot projects funded by the federal government across Australia, focusing on their position in vulnerable regional communities, remote indigenous communities, and rural and regional farms and farming groups.
• The researchers also conducted an analysis of the emerging business models shaped by ownership structures, local contexts, and related challenges and opportunities.

Key takeaways:

• Microgrids (MGs) are small-scale electricity networks that can operate independently of the surrounding grid and are optimized for cost, reliability, and sustainability.
• The expansion of distributed generation, declining costs of solar and wind generation and battery storage, use of digital metering, sensing, communication and control, electric vehicles, and improved analytical methods are facilitating conditions for the rise of MGs.
• The Australian electricity network is transitioning from a relatively simple system with electricity generated centrally in coal-fired power stations to a much more complex and decentralized grid with new large-scale renewable generators, large battery systems, businesses with their own generating capability, households with PV solar panels on their roofs, and MGs.
• MGs offer substantial opportunities from sharing the costs of equipment and especially batteries, which can reduce the aggregate over-investment in excess capacity of the generation and battery systems.
• The variability of renewable energy production imposes two major types of costs on the grid: the risks of power cuts and the costs of maintaining the quality of the electricity supply in terms of voltage and frequency.
• MGs could offer possible solutions to these costs by having a stabilizing influence on the grid by reducing electricity demand during peak periods and integrating intermittent renewable energy.

Emerging Challenges and Opportunities

• Microgrids (MGs) are gaining popularity in the Australian energy market, offering benefits such as reducing emissions and improving energy security.
• However, the lack of economics and business considerations is stalling the progress of MGs.
• Viable business models and benefit-sharing need to be developed to enable the commercial deployment of MGs at scale.
• Ownership structures and business models are linked, and community MGs prioritize social and environmental goals.

Ownership Structures and Business Models

• MGs can benefit all participants in the energy market if coordinated well.
• Business models and ownership structures require flexibility due to the heterogenous nature of stakeholders.
• Existing aggregators and producers should be included, but care must be taken to balance local and remote ownership and inclusiveness versus exclusiveness.
• Three main business models for MGs are based on consumer ownership, utility company ownership, or community ownership.
• The community-owned model offers a simple framework for MG development, including community, technology, institutional structure, financing, and revenue generation.

Paper Title: Australian Renewable-Energy Microgrids: A Humble Past, a Turbulent Present, a Propitious Future
Authors:

¹Institute for Sustainable Futures, University of Technology Sydney, Sydney, NSW 2007, Australia

²School of Business, Charles Sturt University, Bathurst, NSW 2795, Australia

³School of Business, Charles Sturt University, Orange, NSW 2800, Australia

^*Author to whom correspondence should be addressed.

The full paper is under the Creative Commons License BY 4.0 and is available here.