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ESB chair says demand response could kill need for new power plants

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The chair of Australia’s newly formed Energy Security Board, Dr Kerry Schott, has stressed the importance of demand response in meeting the nation’s energy security and affordability needs, telling ABC Radio that if we could harness the technology effectively, we could “all stop worrying about building new plants of any description.”

Schott, who in her role as chair of the ESB is tasked with coordinating the implementation of the Finkel Review recommendations and co-ordinate the three major energy institutions – operator, regulator and rule-maker, and so is set to play a pivotal role.

Some, like the former chief of the Clean Energy Finance Corp, Oliver Yates, want the Coalition government to let her and the others “get on with their job.”

Schott says she is shocked by how little had been done to harness the huge resource that is behind-the-meter solar and battery storage in Australian homes and businesses.

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Schott (far left) at the AEMC forum on Tuesday, with AEMC’s Clare Savage, AEMO’s Audrey Zibelman, and AER’s Paula Conboy

“I am completely amazed at the low level of demand management,” Schott told a public forum on energy sector strategic priorities, hosted by the Australian Energy Market Commission on Tuesday.

“It absolutely stuns me. It’s low-hanging fruit waiting to be plucked, particularly now we have technology that will really help.”

Schott said the ESB – which includes representatives from the Australian Energy Regulator, the Australian Energy Market Operator, the AEMC and two independents – has an immediate focus on the summer ahead, and the potential supply issues faced by South Australia and Victoria, as outlined in AEMO report last week.

Another focus, she said, was on 2022, and any issues NSW might face when the Liddell coal-fired power plant was retired by its owner, AGL Energy.

But as the former head of Sydney Water, Schott compares the current squeeze facing Australia’s electricity sector to the water shortages experienced around the country in the late 1990s and early to mid 2000s, and says there’s plenty we could be doing, right now, and for little cost, to address a large part of our energy security concerns.

“I have a background in the water industry and I was shocked to find how little has been done on demand participation in electricity,” Schott told ABC Radio’s The World Today program on Thursday.

“In water, those people will remember having dual flush toilets put into their homes, and aerated water taps, and recycled water plants have been put in everywhere. That saved water demand between 10 and 15 per cent. It’s quite possible to save that much electricity,” she said.

“Overseas those demand responses have saved around 20 per cent, and if we can save that much, we can all stop worrying about building new plants of any description.”

As well as being an effective grid management strategy, and relatively easy to implement, Schott says it’s also cheap.

“If the cost of demand management is less than the cost of providing power, then why aren’t we doing it?” she said at the Tuesday forum.

Certainly, it is one of the mechanisms that AEMO chief Audrey Zibelman is keen to implement – as a grid-wide no-brainer solution for better management of resources, and as a way to mitigate the removal of coal-fired power capacity, like the Liddell closure.

“We need flexible capacity that can be switched on and off,” Zibelman told the same AEMC forum on Tuesday.

“Our advice was fairly pragmatic,” Zibelman said. “We are concerned that on a 45°C day if we lose a generator (which AEMO has said is quite likely) we want reserves in the system to be able to respond.

“In our report we identified the fact that with amount of variability (from solar and wind energy and electricity usage) is changing rapidly, we need resources that can change rapidly.”

Zibelman also noted that the subject of demand management had been communicated badly and misunderstood by the public – particularly the idea that the market operator would turn off the lights or the air-conditioning.

 “What we are talking bout is being able to use rotating mass, use battery storage, electric vehicles, and create a more integrated system.”

Zibelman said it was clear that the Australian market was heading towards 30-40 per cent “distributed generation”, which meant mostly solar and storage behind the meter. These technologies can and needed to be harnessed to ensure that they contribute to grid security, she said.  

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  • Joe

    We have 1 million plus solar rooftop homes. Lets get them hooked up to home batteries and the smart metering technology that allows demand management…isn’t this low hanging fruit.

    • Chris Drongers

      This would mean changing market rules; changing rules means someone (incumbent generators/distributors/retailers) lose out and new (demand aggregators/distributed generators) gain; on experience of the five year wait for a suggested change to 5 minute bidding intervals on the NEM approving commercial demand management rules will take five years, and then implementing the new rules will take another five years to let incumbent interests unwind/depreciate their current contracts and investments.

  • Brian Tehan

    Demand management, 21st century software control of the network? What would the ESB and the AEMO know? I heard Barnaby on the tele a couple of days ago saying that it’s too complicated for him to understand so we should build more coal generators. Seriously? He also completely misrepresentated what the AEMO recommended. He says despatchable means coal, which it doesn’t mean. How did we end up with such a fool as deputy pm?

  • Steve Jordan

    Maybe some readers have a better memory than I have here.
    I recall that there was an industry group of large power users some 5-10 years ago who offered to organise themselves such that they could deliver co-ordinated reductions in demand to the network operators to assist in meeting restrictions on supply.
    The supply authorities never did engage with them, according to my recollection.
    Anyone recall this episode?

    • Chris Drongers

      My recollection was that the response (from the government, market regulators or commercial operators, I cannot remember which) was more of the ‘you will not be allowed to commercialise a demand response mechanism’ rather than a less negative ‘do your thing but we won’t help you’.
      Now this negative response has come back to bite all three levels, plus the consumer.

  • Ian

    One way to revisualise the grid and its electricity flows is to ask the question: What does electricity represent? Here are some answers 1. Energy to do useful work 2. A consumable commodity allowing flows of Money and influence.

    We all think of it as the energy driving a pleasant existence, but this may not be its primary function. We know that it has in the past been used to tax the population -such as state owned generators making a profit. It has been used as a subsidy to heavy industry – discounted electricity to large users and premium tariffs for home users. It has been a way of redistributing wealth- subsidising pensioners electricity as retail prices have been allowed to rise. Rural communities pay the same as city dwellers. We are often told that the Coalition have supported the incumbents to the point that their energy policies look ludicrous. Electricity for them is a way to buy FF support. Large generators and energy retailers have used electricity to extract huge profits from the population. Etc etc. The point is that the general population now have the opportunity to cut their reliance on inflows of grid electricity and when they do, the more important flow of money in the opposite direction stops.

    • Peter Kretschmer

      It’s a rare a trait to recognise and talk about the value others see in a ‘thing’ that you are looking at – highlighting that each has their own model of the world. I commend you for it. Influencing how others fit the energy dilemma into their model of the world is key to implementing solutions.

  • juxx0r

    If australia built well insulated and comfortable buildings, air conditioning could virtually turn off as the sun goes down, eliminating most of the evening peak.

  • Ren Stimpy

    Crikey, what would the outwardly misoginist Alan Jones say about that picture apart from some Freudian ‘lay down misere’? Betraying his eternally clouded and stunted thinking skills. Um… that as well as ‘Cash For Comment’.

  • Catprog

    Really?

    No new renewables and stuck with fossil fuel stations?