It's a throw-back to the early days of electricity when small businesses and or councils owned and operated a power station and local network in small communities.

Microgrids are both a threat and an opportunity for traditional distribution companies like Ergon Energy as it could take large chunks of customers "off-grid", or in the case of new housing estates, never puts them on the grid in the first place.

While this can help Ergon to manage peak demand, and reduce the burden on network augmentation, it comes at the cost of losing potential customers and revenue.

And today's battery technology and solar PV as well as other renewables are helping to enable microgrids.

Investment companies also recognise the opportunities and are chomping at the bit to get a slice of the action.
Peter Nimmo

Ergon's Effective Market Reform (EMR) business unit is exploring ways our business can use its technological smarts, gained through its many research and development trials, to play a bigger role in this exciting growth area, ensuring the economic spin-offs remain in regional Queensland.

We speak with our EMR Program Director Peter Nimmo (pictured) about the micro-grids.

What are micro-grids?

A micro-grid is a small-scale power grid that can operate independently, or in conjunction, with the main grid. Ergon's 33 isolated communities are effectively micro-grids, powered mainly by diesel generation. But when we talk about micro-grids in a modern sense, we are talking about entire communities snapping off from the grid to set up their own generation and network infrastructure, independent from major distributors and retailers or blended solutions with multiple complexities and grid connections. This is proving to be very appealing for councils, communities and developers, creating new modern housing estates, whereby each home generates power via rooftop solar and shares it with neighbours via a micro-grid total integration of solutions, only needing to tap into electricity from the grid when necessary.

Are micro-grids purely for residential customers?

No, not at all. In fact, Winton Shire Council in central west Queensland, is investigating its own micro-grid powered by thermal energy, effectively going "off-grid" from the main network and operate its own privately-owned power network. Farming communities are also looking at setting up micro-grids, or what they call "closed-loop" designs, sharing power between farms. I know a farmer who is seriously considering setting up a power station on his farm powered by the animal excrement and other onsite generation. This isn't the future, it's happening now, and communities, councils and towns including the built environment are all active in this space.

So, who owns and operates these micro-grids?

We are seeing large developers, local councils, mining companies, superannuation funds and other entrepreneurial businesses eyeing off the opportunity to own and, or, operate their own micro-grids, effectively undercutting competitors. The business model works by locking customers into long-term, competitively priced power deals, integrating technology and financial models into competitive solutions.

Could micro-grids help manage peak demand?

Absolutely, they can, if connected with large batteries that operate in harmony with the network. They would help reduce the need for costly network augmentations. However, this also comes at the cost to our business as they don't become regular customers.

Could micro-grids spark large communities to go "off-grid?"

Yes, in fact, when it comes to new housing estates, it won't be about taking customers "off-grid", but rather, ensuring they are never on the grid in the first place. The technology is there, models are there, and demand is growing fast.

But who looks after the micro-grid network and manages the customers?

This is the part that is not exactly clear. In a sense, micro-grid operators are not constrained by the same regulatory pressures and costs as major networks are, enabling them to offer cheaper rates per kilowatt hour. They would need to arrange for their own network maintenance and manage their own customers.

So, how quickly are micro-grids set to roll out?

Regional Queensland presents the perfect environment for micro-grids with its many small towns and communities. I know of one major housing developer that is talking about in excess of 100 micro-grid housing communities across Australia, some of them in Queensland. There is a major apartment block being built at Sydney's Darling Harbour that will feature its own micro-grid and communities also outside of Queensland seeking such ecosystems towards better economic opportunity.

What role is Ergon playing in this burgeoning growth area?

Naturally, property developers are eager to have the new, greenfield, housing market all wrapped-up, but there are incredible opportunities for existing, brownfield sites; communities like Winton and towns on the other-side of the Great Dividing range with the potential to tap into thermal and renewable or localised energy. Ergon needs to have a seat at the table. We need to ensure we keep the economic spin-offs that will come from this in Queensland. There are other national networks that are playing in this space and would love to branch into Queensland, and we need to be more attentive to this growth area.

What is the EMR team doing?

EMR is about future-proofing our business, setting up new business models that take into regard all the new technologies and trends that are occurring in the wider industry and make sure we are aware and where possible participate in future that are occurring in our industry. Ergon has been doing a lot of research on solar and battery technologies and micro-grids bring the two together nicely. Potentially this is a future business opportunity for us that benefits both Ergon and brings economic benefits to Queensland.