The Enel X VPP is on track to supply more than 30% of the total FCAS need

Frequency Control Ancillary Services (FCAS) play an important role in protecting the power grid against sudden failures within large power stations or power transmission networks. FCAS is increasingly important as we add more renewables to the power grid, especially that provided from new technologies.

Three years ago, nearly all of FCAS came from traditional fossil fuel power stations.  Following a 2017 rule change that opened the market to virtual power plants (VPPs), Enel X was the first new market entrant to register a VPP in the FCAS market. Our VPP is built from a network of electrical equipment (distributed across nearly 100 commercial and industrial sites around Australia) that can respond in real-time when needed by the power grid.  Businesses that participate earn a significant new revenue stream that improves their bottom line.

The Enel X VPP has grown rapidly, and it is now the third largest supplier in the FCAS contingency raise markets. This rapid growth will continue.  We expect that our VPP will reach an average market offer in excess of 165MW by the end of 2020. This will put us in a position to supply more than 30% of the total market need [1]. With this growth, we expect to become the largest supplier of FCAS reserves [2].  

This success is built on a few fundamental competitive advantages. First, VPPs are built from existing industrial equipment (pumps, compressors, fans, etc.).  This means they can be built quickly, and with a low capital investment per MW of capacity.   In addition, VPPs can respond faster than traditional power stations, which means that the capacity they offer is more valuable in the FCAS market.

This FCAS success comes at a critical time for the power grid in Australia, with the Australian Energy Market Operator (AEMO) and others stating that there is an urgent need for new forms of capacity on the power grid.

In this environment, there is understandably a lot of discussion and excitement around the potential for energy storage, and there is no doubt that storage will have to play a critical role in ensuring that we can absorb and utilise growing amounts of renewable power.  We will need GWs of such ‘load shifting’ capacity, and storage (in one form or another) is a key part of the solution.

However, we believe that many are underestimating the impact that VPPs will have on the market.  With their proven and growing success in FCAS, commercial and industrial VPPs have shown that they can deliver critical services to the power grid, quickly and at a large scale.

Enel X manages the largest VPP in Australia today [3].  As Australia accelerates its transition to renewable power, we are committed to growing the contribution of VPPs to the power grid because we believe that large-scale VPPs are critical to achieving a cost-effective renewable future.   

To learn more about how your business can get involved, get in touch with our team. 

References

[1] Based on the average market requirement for Contingency Raise FCAS reserves

[2] Based on average dispatched MWs in the Contingency Raise markets

[3] Bloomberg New Energy Finance, December 2019