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NSW follows Victoria, South Australia in major push to demand management

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The New South Wales government and the Australian Renewable Energy Agency have thrown $15 million into a new trial for demand management, extending the push towards smarter ways of dealing with demand peaks further across the National Electricity Market.

NSW will team with the Australian Energy Market Operator and ARENA to seek up to  70MW of demand management capacity, adding to the 100MW of demand management capacity being sought in a separate trial funded by ARENA.

The initiative is looking for alternatives to building new “peaking” or baseload power stations and will look at options such as paying users – household and business – to switch off appliances or machines, or load shift – in exchange for payments.

That, they reason, is smarter, cleaner, and cheaper than having to force outages on consumers, such as happened to the Tomago smelter in February, when the grid is unable to cope with soaring demand and equipment failure.

And it is also more reliable. The NSW fossil fuel fleet found itself particularly vulnerable in the midst of the heat wave last summer, with more than 2 gigawatts of fossil fuel capacity became unavailable in February when outages were imposed on Tomago.

tallawarra

More than 1GW of capacity was lost when the Liddell coal fired power station had two units closed, the Vales Point coal generator had to reduce capacity because of temperature issues, and the two biggest gas generators, Talawarra and Colongra, also failed spectacularly and unexpectedly (see graph above).

The demand management scheme – a response by governments and institutions frustrated by the refusal of the main energy market rule maker to encourage such initiatives – will be focused on exactly those type of issues, looking to reduce demand for electricity on extremely hot days or to reduce unplanned outages on the electricity grid.

“This is fantastic news, and demonstrates that momentum is building in Australia’s transition to a 21st century energy system,” said Luke Menzel, CEO of the Energy Efficiency Council, the peak body for energy efficiency and demand response experts.

“The fundamentals of demand response are simple – working with consumers to voluntarily move their energy use from periods of high demand (or low supply), to times when supply is plentiful,” said Luke Menzel.

“Where demand response gets exciting is when you can do it quickly, and at a scale. 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.

Menzel said the country is emerging from a long period where tools like demand response were left in the toolbox, despite the fact that they can bring down costs and improve reliability. “That has contributed to skyrocketing costs for energy users, and reduced system security.”

ARENA chief executive officer Ivor Frischknecht said additional NSW funding meant the program could grow by half. “This will provide proof of concept for how innovative and flexible demand side resources can help provide security and reliability,” he said.

NSW and ARENA are sharing the costs of the $15 million program, while ARENA is paying the $23 million for Victoria and NSW.

Australian Energy Market Operator (AEMO) chief executive Audrey Zibelman said such initiatives would help the electricity system deal with high demand as it moves past the need for expensive fossil fuel plants.

She has argued strongly for smarter ways to deal with the system, and for more input on rule making. Demand management incentives have been recommended for years, but fiercely resisted by the fossil fuel lobby, along with other rules that would encourage energy efficiency and battery storage.

Update: The funding round is will close at 5pm AEST on 17 July 2017. Key funding documents – including the funding announcement and funding agreement – will be available on ARENA’s website.

 

   

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  • Jonathan Prendergast

    Does the program have a name? Where does one sign up?

  • Tom

    Audrey Zibelman has no actual power as CEO of AEMO – her job is to run the company according to the rules that the AEMC sets for her. (And the AEMC is full of past and also CURRENT executives of fossil fuel companies and privatised monopoly energy distribution companies). She can’t make any rules, she can’t tell anyone what to do.

    However, clearly from this article, she actually has a LOT of power. She is changing the world, starting with Australia. Demand management is her baby.

    The Greens don’t actually need an energy policy any more. All they need to do is say “Listen to Audrey and do what she says. She gets it.”

    Whoever got her down here from the USA – well done.

    • Farmer Dave

      While I totally agree about the great approach that Ms Zibelman is taking, and am delighted that we were able to lure her here, I can’t agree with you that the Greens could simply pack up their energy policy and go home leaving Audrey in charge. She is doing a great job on the National Electricity Market, but there is much more to energy policy than electricity.

      Indeed, all the great advances and spectacular falling costs make electricity the easy area in which to phase out fossil fuels. Transport is much harder, as is replacing fossil fuels for heat. Air and sea transport are the hardest of all. We need political parties who are serious about a just transition away from fossil fuels to develop detailed and well considered policies to advance such a transition in all areas of fossil fuel use, not just electricity.

      • Ian

        Transport is so much harder, but much more interesting to decarbonise.

        What are the tools we have to get us there?

        You might deconstruct the problem to the very basics. Why do we need transport? Then maybe answer the question: How can we minimise transport.? Then answer this: how can we electrify most transport without using batteries? The next question: How can we maximise the usage of our investment in batteries? This might lead to these questions. How can we dual purpose vehicle batteries for transport and for energy storage to support the common grid or private residence or business? And how can we separate the need for frequent short travel distances and infrequent much longer distances? There are some nice yin and yang issues. For instance private space versus public parking, or freedom of the open road versus congestion in the daily commute. Safety versus vehicle weight. Individual freedom versus the other thing.

        • Shane White

          Yeh Ian, we need to alter our lifestyles to live within Earth’s boundaries, also known as reality:

          So, what are the genuine solutions? We have been approaching “sustainability” backwards, starting with the high-consumption industrial lifestyles and trying to figure out how to make the necessary plunder “sustainable.” We need to start with the answer and work back, look at what Earth’s systems can supply, then fashion a human lifestyle that preserves Earth’s productive ecosystems. Sailing boats, neighbourhood gardens, public transport and small scale animal husbandry may fit into that genuinely sustainable scenario, but electric cars and windmills for eight, ten, or 12 billion people do not.

          from http://www.greenpeace.org/international/en/news/Blogs/makingwaves/the-tesla-dream/blog/56609/

          • Ren Stimpy

            No, we have been approaching sustainability in the right way – the economical way of clean energy disruption and energy efficiency. We don’t need to significantly alter our lifestyles, in fact we can improve them, while getting the energy from cleaner sources and more efficiently. Electric cars will result in cleaner and less energy used for more transport miles. TaaS (autonomous shared vehicles) will result in far fewer vehicles on the road. That’s right, in the future there will be a lot fewer vehicles on the road thanks to the economics.

          • Shane White

            GAWD!!!!!!!!!!!!!

            How many times have I posted on this site what needs to be done for a safe climate? DO YOU HONESTLY BELIEVE COMMERCE WILL PROVIDE EMISSION REDUCTION RATES BEYOND HISTORIC PRECEDENT AND ALSO SINK AS MUCH CARBON ANNUALLY AS THE SEAS OR LAND CURRENTLY DO, FOR THE REMAINDER OF THE CENTURY, WHILE WE ENDURE MORE SEVERE AND FREQUENT NATURAL DISASTERS? That’s all on top of the “usual” wars/conflicts around the world.

            I give up. Please read something scientific Ren.

          • Ren Stimpy

            No need, because I agree with you on the climate science and the urgency of the problem. We’re part of a small minority.

            You’re the one who needs to start getting your head around the politics and the economics Shane. Out there in voter land there’s a large amount of antipathy to climate action, and an even larger amount of apathy. I can give you the exact numbers if you want. A lot of the apathy would turn to antipathy and a lot of ‘good will’ would turn to apathy if people were told they had to TRAVEL BY SAILBOAT AND KEEP A COW IN THEIR BACKYARD. Uneconomical suggestions – albeit well-intentioned – are not a solution and will actually do more harm than good.

          • Shane White

            Well Ren, that may be why this is the end of all.

            We can’t increase the intended rate of emission reductions beyond that published (3% to 6%), and consequently the scientific publications keep increasing the quantity of carbon that needs to be sunk/removed by NETs (negative emission technologies). The story (i.e quantity) is becoming absurd, all the while our emissions do not reduce and the quantity becomes larger and larger.

            Perhaps the Four Horses of Apocalypse have bolted?

          • Ren Stimpy

            I’m not your nemesis, I believe you still have ‘somewhat’ of a point!

      • Tom

        @ Farmer Dave – fair call re. Greens energy policy – I was exaggerating a little bit.

        Still – The Greens could do worse than to invite Audrey to chair their energy policy development committee (if there is one). She’s probably not allowed to be partisan in her role as a senior public servant, which is unfortunate because she’d be bloody good!

      • solarguy

        100% agree. Well said!

  • Ian

    How is this demand management idea different from the old off-peak Tariff or economy tariffs? Could these not be recycled to reflect the new mismatch between supply and demand?

    In the past generation was about load following, with some incentives for load shifting. Now it seems the grid needs a more complex interaction between sources of energy , loads and storage. We have a much more powerful array of tools to manage the grid and a far more diverse range of energy inputs outputs and storage.

    Do we need a perfect supply of electricity when our inverters and BtM storage can tolerate dirty intermittent electricity inputs? We know very well Zipf’s principle ie 80/20 can be applied to many endeavours.So too can it be applied to electricity supply reliability : 80% reliability can be obtained with 20% cost and effort, and the remaining 20% reliability will absorb 80% of the cost. Why should those with low expectations of reliability have to cross subsidise those with very fussy expectations?

    I would suggest the concept of reliability needs to be studied and managed. Certain household loads for instance are not critical. Cold water , for instance is not life-threatening, neither is pool water circulation, or cloths drying. Refrigeration can be an issue, or medical equipment could be life-threatening. 80% of electricity consumption is discretionary 20% is near vital.

    Doing some sums then: to get a 100% reliable grid you would need to spend 100% of available cash. To get 80% of the grid to 80% reliability you would spend 20% x 80% =16% of the available cash. To get the remaining 20% of the grid to 100% reliable you would spend 80%x 20%= 16% of available cash. Add the two expenditures together you get 32% expenditure to satisfy the needs of all consumers!

    This concept of Zipf’s is especially important when solar is so dirt cheap but storage is so very expensive and also when prolonged cloudy windless periods are so rare compared with sunny windy days. Even pumped hydro is cheap when designed to just match daily time shifting of renewables resources but hellishly expensive when designed to provide days of storage for only a few weeks in the year. Well you might say, just use fossil fuels, by brute force you can provide 100% reliability, but humanity has smashed “80%” of the resources in 4 generations and from a CO2 point of view has very little time left.

    • Ray Miller

      Interesting concepts, resilience can also be used. If we focus on resilience at the local level than a range of possibilities emerge. You have ‘essential’ and ‘non essential’ services, so maybe for a start our homes and business should be configured and wired in this fashion to allow for better management? Then if you had a battery backup system you need a much smaller and cheaper system. At the same time by breaking down the services allows cost saving opportunities avoiding the peak costs.
      But it seems a large number of consumers are not on any variable tariff so their is nothing to encourage participation in any coordinated management.