The impacts of your company’s virtual power plant (VPP) services range in scale from residential consumers to grid services. Can you talk us through Reposit Power’s position in the market?
The company itself is six years old. We are probably regarded as the technical leader in VPPs. We’re the only VPP provider registered with the Australian Energy Market Operator (AEMO) for ancillary services not in trial – first in the open market. We have more than 20 contracts with various retailers and distribution networks to provide services ranging from your vanilla network congestion management to reactive power control for voltage support and dynamic solar feed-in management and operations. We’ve had a few different approaches to engage with end users; we had a grid-credits plan, and we’ve had direct-to-consumer VPP participation whereby we did the financial settlement and paid the consumer directly via our app. We’ve seen a lot of changes in the market since we’ve started, but it does seem to be trending toward a system where distributed assets are taken seriously – and we’re well positioned for that.
Unlike some other locations – like California, for instance – Australia does not have energy storage system (ESS) targets. AEMO’s Integrated System Plan says it needs 10 GW of storage by 2040. What kind of targets and policies would Reposit like to see?
A lot of what I’m seeing at the moment, particularly in South Australia, is distortionary government policy creating all sorts of insanity – and not allowing the market to operate and sort out the right solution. State governments need to very carefully consider the interventions they make, when they make them, and for how long. I don’t think the federal government can do anything, I think they’re paralyzed. I’m not seeing a lot of helpful government intervention at the moment – it is neutral at best.
Reposit is the VPP software partner for FoxESS in Australia, in a three-year relationship that has helped spawn many VPP projects across the country. What makes the partnership so productive?
The interesting thing is that when we started talking to FoxESS, they said, ‘Listen, we’re going to do something different but we’re interested in having it do what you need it to do, rather than you having to compromise your software – what do you want?’ And we said that we’d like this and we’d like that, we need this kind of control, it needs to be this fast and at this kind of price, it needs to be AC-coupled here and DC-coupled there, and we were pleasantly surprised to find that they listened.
I think the backing of FoxESS is quite interesting; being the largest stainless steel manufacturer in the world helps to bring costs down, and the battery modules that they currently ship are extremely good. Very cost-effective, very fast, and an excellent choice for stationary storage.
Most interestingly, from an Australian perspective, we told them that these units needed to be able to operate at 50°C (ambient) without derating, and they were able to do that. We’re seeing 40°C days regularly now, and in 10 years time, I am thinking we will see 45°C+ and most units on the market derate at 40°C or 45°C. When you’ve got a VPP running – and its very busy on those hot afternoons – that kind of thermal derate is a bad idea.
Thermal derate is absolutely a concern in Australia and will become a concern more globally as temperatures rise, some of batteries derate at 45°C, and a lot derate at 40°C, making them basically useless.
As you mentioned, FoxESS’s parent company, Tsingshan Group, ensures a uniquely complete industrial chain from nickel mines, lithium battery materials, lithium batteries, and lithium battery packs. Is the market entrance of FoxESS a sign of significant market change?
FoxESS is able to get the price of an installed kilowatt hour down. That’s what the market needs, and that is what FoxESS can provide. People want a battery that they don’t have to think about – and that is what FoxESS’s supply chain brings. A supply chain of this magnitude brings scale, certainty of supply, and distribution to solar installers and the like. It also brings scale to the testing process, meaning that having a 10-year warranty means something. Fundamentally the product is well constructed, reliable, and well-priced. That’s really how batteries need to be. They’re not status symbols, they’re an appliance.
I guess that the euphemism I would use is ‘peace of mind’, but it is the luxury of forgettability.
Absolutely. Ultimately, you want your electricity to come as cheaply and as cleanly as possible. A system that can deliver that reliably and effectively over many years without the need for any user input is what the consumer wants.
How do you see the Australian ESS market evolving over the next five to 10 years?
The market has left the land of early-adopters and entered the land of early-majority. A good chunk of early-majority doesn’t care about the brand, or about the technology. They’re doing it because they’ve got a bit of cash in their pocket and looking to get a jump on a good deal. Customers want to protect themselves from failures in the electricity system – whether they be pricing failures, reliability failures, or whatever else. There is definitely a perception that the electricity system is failing. I’m not sure that’s correct, but there is that perception and people are trying to protect themselves against that.
There are two types of customers in this early-majority land: There are valuers – who are interested in getting value for money, and there are comforters – who don’t want any bad feelings, only good feelings, and they are happy to spend money to get them. So, I think the market is getting to that good place where it is becoming boring, which is to say, established.
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