Designing a renewables-based electricity network


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Researchers at the University of Melbourne are collaborating with AusNet Services, Mondo Power and the Australian Energy Market Operator (AEMO) to develop a blueprint for an electricity network that supports local, low-carbon technologies. Trials for a key aspect of the project are underway, with early results looking promising.

Key points

  • Project EDGE is a proof-of-concept project focused on safely and efficiently integrating Distributed Energy Resources (DERs) into the existing power system and markets
  • The world-first project brings together all relevant stakeholders across the electricity value chain to ensure the model will work in real-life scenarios
  • Project EDGE will test a new concept called ‘operating envelopes’, which is designed to ensure network integrity and allow the trading of local and wholesale network services from the ‘edge’
  • Early results from trials suggest that operating envelopes will work
  • Low-carbon technologies and renewable energies – or DERs – are key to a carbon free future, but the current electricity network cannot support their use at scale.

The outcome

Project EDGE is a world-first project that aims to demonstrate a proof of concept for all facets – technical and commercial – of safely and efficiently integrating Distributed Energy Resources (DERs) into the existing power system and markets. DERs are locally hosted, low-carbon technologies such as home solar PV systems.

The multi-year, multi-partner project is funded by the Australian Renewable Energy Agency (ARENA).

In May, the project began trials of a new concept – and key aspect of the project – called ‘operating envelopes’ and the trading of local services.

Essentially time-varying, ‘dynamic’ export and import limits calculated in real time from customers’ premises, early results from testing operating envelopes suggest feasibility – and that they would ensure network integrity without distribution companies having to directly control DER, which is important to an electricity network that operates from ‘the edge’.

“Making sure that the different building blocks in the calculation of the operating envelopes work in the field is crucial for the success of Project EDGE. The fact that the live trials are producing the desired outcomes give us confidence in the platforms and processes that have been developed.”.

“Project EDGE is about creating a blueprint for how DER and local service exchanges interact with the wholesale market,” says Professor Pierluigi Mancarella, Chair of Electrical Power Systems at the University of Melbourne.

“The end game is fewer emissions, cheaper, greener electricity, and greater access to renewables for everyone.”

As a result of this early success, the team has been funded by CSIRO for an additional project that will provide key metrics and recommendations to help distribution companies and AEMO in their decision-making when implementing operating envelopes in a given area.

In May 2022, Project EDGE WAS awarded the Asia-Pacific Economic Co-operation (APEC) Energy Smart Communities Initiative (ESCI) Best Practices Awards Program Smart Grids Gold Award.

The need

Renewable energies are key to a carbon-free future, and people are taking up them up at a fast rate. In Australia, almost one in four houses have solar PV systems and there are more than 100,000 residential batteries (University of Melbourne, 2020). By 2040, the Australian Energy Market Operator’s (AEMO) forecasts rooftop solar will represent approximately 13 to 22 percent of total annual energy consumption in the national energy market (AEMO, 2020).

But the grid was designed around coal. That is, for large-scale power sources that flow one way, usually from remote mine to consumer in the city, via huge transmission networks, cheaply and efficiently.

PV systems, batteries and other low-carbon technologies – known as Distributed Energy Resources (DERs) – are fundamentally different: small, modular and geographically dispersed, built for local generation and consumption of energy (which flows both ways through the grid), and inherently involves consumer-owned assets. There’s also major disruption commercially; what was a simple market, which only needed to ensure enough power for customers, is now being asked to support the buying and selling of energy from millions of ‘micro-power plants’ in the form of DER owners.

To adopt low-carbon technologies at scale, we need completely new concepts around distributed energy – both technically and at market level.

The research

The University’s Power and Energy Systems Group, which includes Professor Mancarella, Professor Nando Ochoa and Dr Maria Vrakopoulou and several other researchers, is providing research for multiple aspects of the project, via the Melbourne Energy Institute.

One key area is developing the algorithms to calculate operating envelopes. With AusNet, Professor Ochoa, along with Dr Michael Liu, is testing these as part of the trials.

“Implementing the algorithms within the operational environment of AusNet, called the DER Management System (DERMS), is not trivial at all. The algorithms are just one part of the new ecosystem where data, forecasts, and the resulting operating envelopes need to seamlessly flow between the DERMS and aggregators. And since it hasn’t been done anywhere else before, there is another learning curve,” Professor Ochoa says.

Professor Mancarella and his team are exploring new two-way markets with AusNet. This also involves developing algorithms – here for the aggregator, represented by Mondo, to manage DER portfolios effectively at scale and bid aggregated energy in the wholesale market (like a coal or gas plant does currently).

A range of potential market operational options will be tested to understand the costs, benefits and impacts on customers and other stakeholders, and ensure the best ‘blueprint’ is proposed. Already, socio-techno-economic studies performed in the project are informing important policy and regulatory aspects of the energy transition, with the University team working closely with the Australian Energy Market Commission (AEMC) and the Australian Energy Regulator (AER) on key issues such as optimality and fairness of network capacity allocation to different customers.

The Group is also helping define the research plan needed to ensure Australia can successfully adopt these new concepts, including around benefits and scalability.

"We’re helping to build frameworks for the technical problem, the economic problem, and the social problems – like fairness – which emerge in a social economic context,” says Professor Mancarella.

Technology development history

The idea for Project EDGE began with AusNet, AEMO and Mondo in an effort to reconceptualise the electricity system to support DER, which is a fundamental transformation of the system.

In 2020, the project was awarded funding by ARENA, and the University of Melbourne’s Power and Energy Systems Group was brought into the project by AusNet and AEMO to contribute to all aspects in terms of research. This included co-design, drawing on the experience of all parties.

From the beginning, the team started bringing on stakeholders from across the electricity value chain (including customers, DER owners, aggregators, distributors, the system/market operator, and of course researchers) to take part. While the project is initially off market to allow experimentation without impacting live market activity, having all stakeholders involved is a key aspect of the project as it will allow the project to demonstrate real life capabilities, which can then be replicated at scale.

Testing began in May 2022 and will run until the first quarter of 2023, and the findings will forge a new path for other Australian companies hoping to harness local, low-carbon electricity into the future.


The University of Melbourne

AusNet Services

Mondo Power

Australian Energy Market Operator (AEMO)

Funding support

Australian Renewable Energy Agency (ARENA)


Australian Energy Market Operator. (2020). 2020 Integrated System Plan (ISP). University of Melbourne. (2020). Project EDGE. Department of Electrical and Electronic Engineering.


Professor Pierluigi Mancarella

Professor Nando Ochoa

Dr Maria Vrakopoulou

Dr Michael Liu

First published on 13 January 2023.

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