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AEMO looks at smarter ways to deal with extreme peaks and heatwaves

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The new direction of a rejuvenated Australian Energy Market Operator is starting to take shape, with the organisation announcing plans to have 100MW of demand response capacity in the Victorian and South Australian markets in time for the summer peaks and heatwaves.

heat wave demand response

The program, being run jointly with the Australian Renewable Energy Agency, signals a tangible change in focus for AEMO, and the market in general, in finding smarter ways to manage supply and demand rather than simply building more fossil fuel plants and poles and wires.

AEMO’s new CEO Audrey Zibelman is already a champion of demand response and it was one of the major levers that she pulled when running New York’s Reforming the Energy Vision program that aims for more decentralised power, and 50 per cent renewable energy by 2030.

In the PJM market, one of the biggest in the US, demand response accounts for 10 per cent of total capacity, and Zibelman sees no reason why it cannot grow to be at least 30 per cent of the Australian market.

That’s because Australia has a ready-made investment in the technologies that are needed. More than 1.6 million homes and businesses have installed rooftop solar, and many of these will install battery storage as well.

“If you have solar on your roof and you are putting in storage, it is saying that during certain hours of the day you use solar to charge up the battery, and then, rather than relying on grid, you reduce demand on the grid. For us (the grid operator) that’s the same as increasing generation.”

Zibelman says it is an obvious solution to provide a price signal to use these resources, as well as rewarding others – such as manufacturers and large businesses – for cutting back on their power usage at critical moments, rather than spending more money on new plant.

demandresponsekW

“If we can reduce the amount of demand, that has the same benefit as the grid, and is a lot less expensive than building a new power plant that is only used for a few hours a year,” she says.

ARENA will inject $22.5 million to fund the pilot program, and the two organisations were running an all-day workshop with industry stakeholders in Melbourne on Friday to consult on the program.

The money provided by ARENA will be used to actually make the “reward payments” to consumers who deliver the smart response. It is needed because, unlike other countries, Australia’s main energy market does not have a broad-based mechanism to encourage the service.

The main rule maker, the Australian Energy Market Commission, has been resisting such changes – as it has many other initiatives – under pressure from the fossil fuel industry.

“This is a breakthrough moment,” said Luke Menzel, CEO of the Energy Efficiency Council, the peak body for energy efficiency and demand response experts, many of whom were at the AEMO/ARENA workshop.

“The technology now exists for sophisticated and substantial demand response, enabled by aggregators that combine many different sites together into ‘portfolios’ that provide flexible, secure and stable demand response.”

“This approach is common in energy markets around the world, but has long been underutilised in Australia’s National Energy Market (NEM), because the right structures and incentives for aggregators to do this work haven’t been put in place.”

The timing of the initiative is telling, given the issues about blackouts and load-shedding, and several near misses that occurred last year across the eastern states, but particularly in South Australia and NSW.

The retirement of Hazelwood has raised fears of shortfalls in energy, but a major concern for AEMO is the performance of the plant that are still in operation, given the failure of key coal and gas generators at critical times during the heatwaves earlier this year in South Australia, NSW and Queensland.

AEMO is also under scrutiny over its handling of some of those events. But since Zibelman’s arrival in late March, the focus has very much switched to smarter solutions rather than traditional technologies.

“This is about the future of the grid,” Zibelman says, noting the new technologies such as software, smart thermostats, smart appliances, as well as solar and storage beyond the meter and on the grid. She said this technology can be used to avoid outages.

“If we can reduce the amount of demand, that has the same benefit as the grid, and is a lot less expensive than building a new power plant that is only used for a few hours a year. Some call this the democratisation of energy …. but it is essentially about the ability for people to use their own resources, and to get reward for it.”

A trial run by United Energy revealed that peak demand could be reduced by up to 30 per cent, and in its Future Grid report, the CSIRO and Energy Networks Australia openly canvassed the option of paying households with solar and storage to effectively “leave the grid” during periods of peak demand when supply was struggling to provide enough power.

EnerNoc, the  largest demand-response aggregator in the world, said in March that it could source a 100MW “virtual power plant” in South Australia by December, by signing up commercial and industrial users to agree to reduce non-essential load when dispatched by AEMO or the SA government.

It said this would be far cheaper than installing an equivalent amount of polluting and expensive diesel generators that the South Australia government is considering under its Energy Security Plan.

“Demand response is an elegant solution. By creating voluntary measures, and a virtual power plant, we can protect those customers who don’t want to be cut off. It turns the load shedding paradigm on its head,” Asia-Pacific director Jeff Renaud told RenewEconomy last month. This could be achieved with relatively simple improvements to the NEM’s market design.

Zibelman favours the use of demand response,  but such suggestions have been hitherto rejected by the Australian Energy Market Commission, which sets the rules, after the usual fierce lobbying from the fossil fuel industry.

The demand response proposal signals greater co-operation between AEMO and ARENA, particularly on the integration of renewables. A trial using wind energy to provide frequency control is to be held in South Australia next month.

Australia, despite being ahead in the deployment of renewables, is trailing most markets in the use of mechanisms to manage the variability of supply, and in the use of energy efficiency and demand response to manage peaks.

Zibelman says trials are a good means of showing a “proof of concept” that can then be used to bring in new market mechanisms and rules.

“I know it will work,” she told RenewEconomy.This is a good way to go forward to provide the proof of concept. We often see skepticism about change. This is a good way to show that this can work.”

She was also enthusiastic about the A-LAB program, which is designed to encourage dialogue on new market mechanisms and challenges. “The role that AEMO should play is taking on the more complex issue and helping solve them.”

Zibelman said the advantage of demand response was that it was fast acting, and could provide services over short and long periods, essential in a renewables-based grid that needs more flexibility. Behind the meter storage, and even electric vehicles, would also play a critical role.

“We know the wind blows better at night … and we know that solar delivers during the day. If we can use storage to charge batteries and shift that capacity, and shift some of the demand  …  that’s the kind of thing we want for grid of the future.

ARENA CEO Ivor Frischknecht also said demand response would help to facilitate Australia’s transition to renewable energy.

“We need to find new, smarter ways of coping with spikes in demand and volatility as we move towards an electricity system with more variable renewable energy supply.

“Initially, we are seeking to fund demand response to make available temporary supply during system-wide emergencies. In the future, demand response could also be used to smooth out frequency disturbances, network disruptions or price peaks,” Frischknecht said.

Zibelman said that while she expected 100MW of demand response to be in place by summer, she was not advising plans by the SA government to install diesel generators to be abandoned. “I think that this summer we going to want all the resources we have available. This is, to me, a supplement.”

  

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  • Chris Fraser

    We’re on a mission to use more PV when nobody’s home, even today during Autumn ;-
    09am-10am – short hot dishwasher load 1.5kWh
    10am-11am – cold cycle clothes washer load 1.0kWh
    11am-12pm – hot water tank electric boost 2.0kWh
    All managed by timers, daily consumption reduces 15.5 to 11kWh.
    Ahh, all this and batteries too …

    • Rod

      Anyone who is not on a premium feed in tariff should follow your lead.
      Makes sense for the individual ($) and the grid.
      If solar households pre-cool their space while the sun is shining in Summer they can survive the evening heat without AC. No batteries required.

  • Mike Westerman

    Thermal storage by and large is cheap, much cheaper than batteries: I would hope some of this thinking goes beyond storing electricity, to looking at storing the heat or “coolth” that the electricity makes. An insulated tank to store enough “coolth” for a typical house to stay cool from sundown till when outside temperatures drop low enough that fans are sufficient, would not be that big, but incentives to install the different heating/cooling systems needed would be required. However, many larger HVAC systems already use water as the thermal distribution media and could readily be adapted.

    • Ian

      Ice storage HVAC is already a thing – Google it.

      Playing with thermodynamics principles within the home situation can yield some interesting conclusions. Here are some thoughts on these matters.

      Proper insulation in walls, ceilings and possibly windows with at least infrared filters is the baseline. External shading of North, East and West facing windows is a must. After that just running an air-conditioner using solar pv in the day with some thermal mass such as concrete floors, stone benchtops and other stone or concrete type furniture or internal wall cladding should store a lot of coolth for the evening.

      You really cannot get fancy with thermal storage for the house without thorough insulation of the external building envelop and very careful attention to sunlight ingress – Passiv Haus principles – . Just don’t insulate your house and then allow the summer morning sun to stream through large east facing windows – greenhouse principles -.

      If you perfectly insulate a house then the air conditioning will be needed to extract heat from various sources.

      Kettle 1KW for 5min, cooktop 1Kw for 1 hr old incandescent light bulbs 100w each, new led bulbs 10W each, shower ?1KWH, fridge 1.5KWH a day, old desk top computers 500W, new laptops 30w, TV 100W, human 100W each.

      If you are going to precool your house in the day, you might want to move the kitchen to a separate part of the house as these heat sources could just negate all the cooling efforts.

      Has anyone had experience with hydronic floor cooling? This should provide very nice radiant cooling.

      Last ideas for now: the reason we want air conditioning is to feel cool. We don’t necessarily want to be chilled down. Types of heat transfer are radiation, conduction, convection, evaporation. We just need to tick these boxes to feel cool. Radiation : cold walls ,floors, furniture. Conduction cold air. Convection fans, evaporation dry air. Air Conduction is probably the least efficient form of heat transfer.

      • Michael Murray

        The problem is getting this stuff in the building codes. Houses still get built in Adelaide with upper windows without any effective eaves.

      • Steven Gannon

        R 3.5 bats work just fine.

      • Rod

        All good points and there is no reason most households can’t affordably retrofit their dwellings to be more energy efficient.
        Flushing the house at night to cool it and using external shading and internal fitted heavy curtains do a great job of keeping heat out. Shaded roller shutters might be overkill but we have them on the West and the still air pocket seems to do a good job.

        As for keeping cool, on the odd occasion we need it, we set the AC to 27C and use standing fans to move air. Apparently ceiling fans upset the inverter.
        Another thing we do is use water spray to pre-cool the heat pump air. Similar to the cool-n-save. 30% reduction in energy use right there!
        If the majority of households embrace energy efficiency, Summer peaks will be greatly reduced.

  • phred01

    wait for the road blocks if the incumbents cannot make killing then this will fail

  • daroiD8ungais7

    Is this article talking about this mechanism apparently starting 01/07/17?: http://www.aemc.gov.au/Rule-Changes/Demand-Response-Mechanism#

    • I think the first paragraph gives you a clue from the AEMC. They say: “The final rule does NOT implement the demand response mechanism.”

      • That’s why AEMO and ARENA have gone on their own.

      • daroiD8ungais7

        Yeah, there was a proposal about DRA from AEMO from 2013 that was
        supposed to implemented by 2015. I thought when AEMC they said “not
        implementing …”, they meant that scheme, because the very next
        sentence says “The AEMC has made a final rule that will provide for a
        new type of market participant – a market ancillary service provider –
        to offer appropriately classified ancillary services loads or
        aggregation of loads into frequency control ancillary service (FCAS)
        markets.”. Then they go onto describe this new MAS role within FCAS.
        Sure is confusing. I’ll have to read the whole bloody thing …

  • Cooma Doug

    Good listen Giles and good read.

  • john

    I frankly think that 100MW needs to be increased up to perhaps 400MW or more to ensure that the grid has a large quick response to ensure that a smoothing of demand over generation and can result in a lowering in the cost of energy.

    • I think that is the intention John. As Zibelman says, it could be 30% or more of peak demand. That’s about 10,000MW in total!!!

  • Brian Tehan

    I saw Audrey Zibelman on The Business last night. She’s a CEO with superb engineering technical knowledge and logic. How on earth did she get the job? We’re lucky that she did.
    She as good as admitted that AEMO had been wrong on the gas shortage issue. I think that she’ll be going over any of their future reports with a fine tooth comb. She also spoke about demand management and storage without any spin. Refreshing.

  • Just_Chris

    This is very sensible but can’t companies already do this? I mean can’t big energy users get a reduction in the their power rates if they agree to be load shed?

  • Noel Schubert

    FYI the main grid in WA has around 560MW of demand response (called DSM in our capacity market) from an annual peak demand around 4000MW. See Fig. 4 and Table 24 of the this ESOO published in June 2016: https://www.aemo.com.au/-/media/Files/Electricity/WEM/Planning_and_Forecasting/ESOO/2015/Deferred-2015-Electricity-Statement-of-Opportunities-for-the-WEM.pdf
    It shows what can be achieved if the incentives are there.
    Recent rule changes have caused over 400MW of this capacity to withdraw from the market for future years due to the new low prices being paid for demand response.

  • Marathon-Youth

    SOLAR ENERGY-=CORRUPTION!!

    The Rich Man’s Venture
    The Poor Man’s Burden

    When a man pays to another for electricity from the sun where both get free, there is corruption.

    When that same man can make his own electricity from that sun and yet he pays another for that electricity we have a liberal

    When there is plenty of technology to allow anyone to make electricity from the sun and only some have access to it then we have elites who hold technology for a price to the rest of us

    and

    when the rich who promote solar energy do not use it then they are not consuming the product they endorse and expect the poor man to shoulder the change.

    • Chris Fraser

      But when we use the Sun for energy we ARE paying another – specifically a solar installer. We create an economy !
      When we pay for solar in order to save another from having their load being shed from the network … there we have altruism.

      • Marathon-Youth

        Chris
        Not if that economy mainly serves the rich who promote solar energy but do not use it.
        I would rather have an economy where the citizen gets free energy from the sun and uses the extra cash for other things.

        • Chris Fraser

          So, just making sure I have understood …
          Do you believe the Rich, the Elites, have an unfair advantage over all energy consumers through accessing a premium feed-in tariff ?

  • Marathon-Youth

    The Sun is not simply “free” for all mankind but the human cannot live without the sun. His entire world of food to his environment is dependent on the Sun. He gets vitamin D and his being lives on Sunlight.

    then the role of fire which electricity replaced is also basic to modern man. We should not pay for any solar created Electricity. It is ours by right just as our air is.

  • trackdaze

    There ought not be a pool pump, hot water heater, dishwasher or dryer turn on at peak times.

  • GJM

    Late comer to this item and can’t understand what is so new. Demand management been happening in Australia – and my home state of Queensland – for decades. No idea what else needs trialling. Just get the results from the AC, pool filter and hot water programs running in South East Qld for the past years should show it works. Likewise plenty of data from various distributors about business-based demand management already working