Australian solar executive highlights importance of software, data


From pv magazine Australia

In its eight years of existence, One Stop Warehouse has come to dominate Australia’s solar distribution sector. The company posted record revenue in the 2020 financial year, hitting AUD 512 million ($396.8 million). That same year, Zhang entered the retail electricity market by opening Discover Energy.

“At its core, Discover is really a tech company though,” said Aaron Chen, Discover Energy’s director of corporate finance.

At Sydney’s International Convention Centre last week, Zhang and Chen told pv magazine Australia about their interlocking vision for the two companies – for which IT is the centerpiece. “The company’s DNA is very different,” Zhang said. 

One Stop leases tens of thousands of square meters in almost every Australian state to house solar equipment like PV panels, storage batteries and inverters. It then supplies that equipment to solar installers and retailers. As crucial as the physical aspect of the business has been in launching One Stop, it’s hardly the most important part of Zhang’s business future. IT, he says, is really where the money is.

Aaron Chen, left, with Anson Zhang, right. Image: Bella Peacock

Which is why he started Discover Energy. The point of venturing into the electricity retail space, Zhang and Chen explained, is to understand Australia’s electricity markets, to be up close to the action, to see what happens there. “As a tech company, we need data. You only get data if you have customers,” Chen said. “The more customers, the more data, the more accurate [your algorithms become].”

Algorithmic backbones

Who knew math equations would prove so sexy in this brave new world? But sexy they are. Algorithms and IT are really the brains of the software system, which are in turn the brains of how any computer-driven system operates.

“Software as a service – that’s the key,” Zhang said. One of the key areas Discover Energy is using its software is in its virtual power plant (VPP) offerings.

Horizon VPP’s dashboard. Image: Bella Peacock

VPPs are software platforms that connect the capacity of home batteries distributed around the grid and join their forces so they have enough power to meaningfully engage in lucrative spot markets. Through a VPP, a home battery goes from being a solar-shifting device to an electron-trading platform that can generate profit for its owners.

There are a number of VPPs operating today in Australia, with state governments backing numerous trials, and energy giants like AGL and Origin also trying their hand. However, Discover Energy’s VPP is the only platform in Australia that can integrate all battery brands, according to Zhang – giving it an important point of difference.

“We are a truly hardware agnostic platform,” Chen added.

They describe Discover Energy’s platform as the “Android” of the VPP world – able to integrate with any hardware. Many of Australia’s other VPP operators rely on software provided by, for instance, Tesla, which naturally only pairs with its own battery hardware – a business strategy more akin to Apple.

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Steady rollout

Discover Energy’s strategy has been to slowly spread through Australia’s states with all their technical variations. It’s been operating a VPP in South Australia for two years now, aggregating a capacity of 5 MWh. The company later moved into New South Wales and Queensland before launching in Victoria and the Australia Capital Territory (ACT) in April of this year. Zhang believes Discover Energy is the first company to launch a VPP in the national capital.

Discover Energy currently has 735 VPP customers across the nation. Its target is get to a total of 2,000 by the end of this year. Given there were roughly 10,000 home battery installations in Australia last year, his target is characteristically ambitious, but Zhang is adamant that the company’s capacity to integrate with any battery brand and hardware gives it the upper hand.

Operating virtual power plants across the country has provided Discover Energy with the data it craves. For instance, it’s found that at any given time, around 15% of batteries won’t be able to answer the VPP’s call to discharge their power at the most profitable moment because in reality it’s already being drawn by its ultimate overlords, the household’s owners.

On top of that, another 10% to 15% of household batteries won’t respond simply because they have bad internet connections, leading to roughly a 30% non-response rate overall. Not only does such knowledge breed more accurate algorithms, it has also proved helpful for Zhang in other ways, by granting him a powerful position of influence.

Knowledge is power

Australia’s Clean Energy Regulator estimates that around 80% of solar panels installed in Australia are sourced from China. The country also relies on China for much of its other solar equipment, too.

Zhang is therefore acutely aware of his position as “middle man,” as he called it. That is, he is able to communicate with parties in China about what Australia actually needs to deal with its unique technical issues.

From the start, Zhang’s business strategy has always been focused on B2B (business to business). So it’s hardly surprising that he is bringing that practice to Discover Energy, which is far more customer-facing than One Stop. Zhang said he’s been able to influence the next generation of batteries entering Australia from the Chinese market. Why? Because he has useful information – information Chinese manufacturers need.

Zhang sees VPPs as one of the solutions to smoothing Australia’s increasingly unsteady grid. “New things always bring new problems, they just need new solutions,” he said. Ultimately, it’s about finding non-network solutions to solve the networks problems, he adds – like a VPP.

Naturally, the role of VPPs will grow as battery uptake grows, for which Zhang also has high hopes. He forecasts that in the next three years, the price of installing a solar+storage system at home will drop from the AUD 13,000 to AUD 10,000 it generally costs today, down to between AUD 7,000 to AUD 8,000.

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