Author Gilles Walgenwitz
Date July 2017
Across Victoria, South Australia, New South Wales and Australian Capital Territory expressions of interest are being sought by the Australian Energy Market Operator (AEMO) from large energy users who may be able to provide reserve energy over the upcoming 2017/18 summer. Applications close 5pm AEST 17 July. If your business has the ability to curtail its electricity load and/or has dispatchable power generation available, participation in demand response provides an opportunity to generate revenue and offset energy costs, while supporting the market at times of extreme demand.
Certainly these initiatives will deliver energy security over the summer ahead, however the overarching aim is to better support the electricity market as new, enabling technologies develop over time.
Seeking 700MW in energy reserves across Victoria and South Australia, and 60MW in NSW/ACT – before summer
Suitable participants are likely to come from the customer segments outlined in Table 1below. Sector-specific end users (described as ‘verticals’ below) are suggested for inclusion in the demand response trial based on the expected magnitude of their electrical demand (load), the ability for customers to control their demand in response to the dispatching needs (dispatchability) and the likelihood that this demand response capacity can be dispatched (firmness).
Who could be eligible to participate?
Table 1: Suitable candidates for demand response
|Typical end use/segments with Demand Response technical potential|
|Large pumping loads (e.g. water distribution and transmission pumping / water treatment plants / irrigation systems)|
|Thermal storage / refrigeration (e.g. food manufacturing/processing / cold storage / distribution centres)|
|Batch processes / material handling / process heating (e.g. in manufacturing / mining)|
|Ventilation / fans / blowers|
|HVAC / lighting|
|Back up generation|
Energetics’ proposed approach is based on the application of a standardised screening approach to identify the most likely and cost effective demand reduction options. An ex-ante impact evaluation of demand response potential is carried out, together with the participation rate (function of controllability and acceptability) and likely shed rate. This is supplemented by an initial cost-benefit analysis applying minimum cost effectiveness thresholds.
Demand response program features
The following table summarises key elements of the demand response programs on offer.
Table 2: Summary of programs
|Program||Regions||Volume required||Funding available||Payments available|
Reliability and Emergency Reserve Trader RERT
|Vic and SA||600MW total across both regions||Bespoke contract agreement||Availability and dispatch fees|
ARENA will provide grant funding to successful applicants under the competitive round to assist a range of energy users to become demand response-enabled for load reduction.
|ARENA/AEMO Demand Response Pilot Program Short Notice (SN) RERT||Vic and SA||100MW total across both regions||$22.5M||Availability and dispatch fees under the SN RERT|
|NSW and ACT||60MW||$15M|
|Some key considerations
Demand response can be aggregated
Demand response will be not be eligible if it includes:
• more than 20 per cent fossil fuel generation as a proportion of MW capacity;
• new fossil-fuel generators; or
• newly rented fossil-fuel generators.
A minimum 5MW and maximum of 30MW may be offered to applicants.
For further details please see the ARENA funding announcement.
If you are interested in participating or would like further information please contact one of Energetics’ energy markets experts info.Energetics@energetics.com.au.