How do individual households contribute to climate change solutions? Recycling helps, as does the purchase of electric vehicles and wariness about how and when to use energy.
But what about production of energy, rather than just consumption?
A tangible solution is Virtual Power Plants (VPP) within communities. A VPP connects homes that are harnessing solar energy in a grid, uses batteries to store power, and distributes on demand within that community. And it’s all renewable energy.
In Australia VPPs are being rolled out by Evergen, a company that’s been around for six-years which was initially a collaboration between AMP Capital and CSIRO Energy.
At its heart is a distributed energy resource management system (DERMS). It’s a software platform used to manage energy resources better – especially the growing number of home and business behind-the-meter solar PV and battery installations.
It includes plenty of future-world products – weather forecasts feeding into demand management of energy, dashboards for easy control of the system, and connection with other, large scale solar and battery systems.
The Evergen software allows network operators (like Endeavour Energy and AusGrid) and energy retailers to manage fleets of distributed energy resources in real time to support grid operations.
Another way of putting it: Evergen provides the software which will better enable the electricity grid to integrate many thousands of small renewable generation and storage systems and help accelerate the de-carbonisation of the energy market.
But it’s been quite a journey to get to this point.
A Bright Idea
Distinguished businessman and sportsman Simon McKeon, AO, was chair of both AMP and CSIRO in late 2014. He understood the need to marry innovation and finance. He understood the future of renewables. And he understood that sometimes you need to leap without being sure what’s on the other side of the chasm.
McKeon called in his management teams from CSIRO and AMP Capital to meet, spend time together and thrash out ideas that were innovative and showed commercial potential.
AMP Capital, cognisant of the accelerating technological revolution and community desire for decarbonisation, wanted to better understand the risks and opportunities that lay ahead in the energy market.
It brought together two very different organisations, experiences and cultures.
Over a period, ideas discussed ranged from fintech and real estate software through to aged care solutions. Another was energy, and that turned out to be the ace in the pack.
The Meeting of Minds
The CSIRO Energy team was based in Newcastle, north of Sydney. It had recently completed an extensive research project – The Future Grid Forum – developing scenarios of what the energy market might look like in 40 years. It was a significant piece of work, and one of the critical findings was that consumers were likely to increasingly participate in the market.
AMP Capital was already a major investor in energy infrastructure on behalf of its clients. It had investments in power lines and poles as well as gas pipelines. It was interested in how the energy market would evolve, and what that meant for its clients’ investments.
For AMP Capital, it was not just the infrastructure business that was interested in the CSIRO research. Its large real estate business was a big user of energy. It also had many large prime industrial, commercial and shopping centre buildings with large rooftops that could be used to help capture and store solar energy.
In effect, AMP Capital and CSIRO were both thinking about energy of the future but coming from different and complementary perspectives.
Timing is Everything
Around the same time, there was some concern from network companies about the impact of people creating their own energy through the use of solar photovoltaic (PV) technology.
That’s where solar panels are put on rooftops and electricity is created from solar energy directly and used in households.
It was good technology but didn’t always meet the needs of households where peak loads didn’t always match peak sunlight.
CSIRO had been developing experimental technology around optimisation software to better match solar PV & battery technology with individual consumer demand.
The proposition was simple. If you set up solar panels and a battery in a house, then you could store energy locally, and consumers could save money on energy (after an initial outlay). Now add some intelligence to the system. Use algorithms and data to help predict both potential energy input, and output. Tomorrow will be cloudy. Use that information to forecast demand and supply.
With enough inputs, optimisation software can improve efficacy of PV solar and batteries. Immediately the consumer was getting better return for their investment.
Early field testing of the optimisation software indicated that it had the potential to provide materially better returns for home batteries1.
The Creation of Evergen
The potential of VPPs was enormous. They weren’t going to replace large coal-fired power stations overnight, but we believe VPPs directly addressed many challenges facing the energy sector – people wanted to be part of the solution, the desire for renewable energy.
Pro-consumers wanted to not just access energy but generate it as well.
The team knew that software could make a difference to energy use and the national market. AMP Capital judged that smart technology on solar PVs and batteries had the potential to be a game changer in the energy world. Solar PV was growing in usage and was going to impact businesses and networks.
CSIRO and AMP Capital both put resources into doing some more formalised consumer testing. They found that if the technology was affordable, people wanted it.
We found there was clearly demand for pro-consumer, peer-to-peer trading, interconnected through a dynamic, sophisticated network.
Evergen was created as a joint venture company between CSIRO and AMP Capital.
AMP Capital’s Differing Thinking.
By investing in Evergen, AMP Capital was using its balance sheet to invest in research and development of technology relevant to the companies and sectors in which it invests its clients’ money. That is very different to investing client’s money in start-ups.
It’s an example of how AMP Capital differentiates itself, which allows it to make better investment decisions for clients. It’s also representative of how AMP Capital has actively approached ESG to achieve better outcomes for clients.
Results Tell the Story
Evergen’s smart technology enables a more distributed and decentralised energy system in Australia and internationally. In a world where renewable energy will replace fossil fuels, it provides a practical solution for households.
The company’s mission, adopted two years ago, is to destroy a coal fired power station in ten countries by powering the transition to a resilient, renewable, decentralised energy system of the future.
Evergen isn’t just about residential sites. Optimising renewable energy and orchestrating large fleets of batteries is done in industrial and commercial locations as well.
The efficacy of Evergen’s platform was put to the test recently when New South Wales based electricity distribution group Ausgrid undertook a VPP trial.
It was hoping to identify how the grid can utilise renewables, maximise grid efficiency benefits and reduce costs for customers via VPPs.
Part of the scope of the project was to assess whether Evergen could provide a commercially and technically viable demand management option, utilising their fleet of existing residential customer batteries.
Could VPPs reduce demand on the grid during hot summer and cold winter evenings when demand peaks? Are they a reliable source of voltage support?
The conclusions were so good that Evergen is now working not just with Ausgrid, but also Energy Australia, EVO Energy and Endeavour Energy to create VPP orchestrations.
The Ausgrid report concluded: “The trial overall is proving to be a successful example of Evergen’s core competencies including the agile nature of the business, direct access to a large diverse fleet, API integrations with a range of leading battery brands and our model of continuous improvement.”
Since the Ausgrid study, Evergen has been chosen to provide the energy management platform for the net-zero energy emission terrace homes pilot at Carseldine Village north of Brisbane. It’s a 100 per cent solar and battery neighbourhood and includes 194 sustainable living terraces.
Evergen is gaining global recognition too. The BBC was commissioned by the World Energy Council to feature leading global energy start-ups under the banner of “Humanising Energy”. Evergen was one of the start-ups featured.
In addition to this, they are also a finalist at the Start-Up Energy Transition (SET) Award 2021 in Germany. Known as the ‘Oscars’ of the cleantech sector, these awards are organised by the German Energy Agency and the World Energy Council.
For Evergen the future is now. It has two further large supportive shareholders in Artesian VC and Providence Asset Group, while CSIRO and AMP Capital remain steadfast supporters.
It now controls some of the largest fleet of batteries in Australia . It is at the front and centre of the three Ds of energy transformation – decentralisation, digitisation and decarbonisation.
It’s now the leader of VPP software. Evergen controls fleets of homes, and offices, and will soon be controlling batteries at large renewable installations.
It’s a great example of collaboration at two levels. The first is between innovators and financiers – CSIRO and AMP Capital.
The second is between consumers within communities wanting to make a difference.
Evergen started off as a way of exploring the risks and opportunities around our existing investments. It has evolved to provide insights into how batteries and renewable markets will operate and what the future of energy looks like.
Subscribe below Institutional Edition to receive my latest articlesMichael Cummings, Global Co-Heads of Core Infrastructure Equity
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