Battery storage just part of smart demand response to grid problems

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The threat of electricity blackouts in southern Australia next summer and our bizarre ‘gas crisis’ seem to be dragging us out of the rock-throwing approach to energy policy making.

Stabilising the situation in southern Australia

While initially the debate over South Australia’s problems was about supply, the need to stabilise the situation before next summer has driven some useful developments on both the demand and supply sides.

A call for bids to provide battery storage resulted in 31 bids. Rooftop solar is booming, and large-scale solar and wind are going gangbusters.

This highlights how fast our 21st century energy industry can respond. It also shows how risky those big projects that take years to implement are.

Even PM Turnbull’s ideas for Snowy and Tasmanian hydro will struggle to compete in the new world of modular, distributed energy solutions.

We have also seen a belated recognition that demand response can fix short-term problems. Demand response involves aggregators contracting businesses to cut demand or run backup generators at short notice—when paid a fair price for their contribution.

This provides guaranteed reduction in electricity (or gas) demand, reducing the need for additional supply capacity.

It is widely used in other parts of the world, but our energy policy makers have been glacially slow in establishing a framework.

States will need to set up demand response mechanisms through energy retailers, which they still regulate, as national regulators are very unlikely to act quickly enough. Since first writing this, AEMO and ARENA have announced a demand response pilot project ( of 100 megawatts. This is great, as someone is finally responding to the obvious: demand response is the quickest, cheapest way of avoiding blackouts.

But the way this is being done has also exposed how broken our national energy market system is: they have had to work around the normal mechanisms.

We need much more demand response capacity to break the market power of the gas and coal generators, so there is still a need for states to use their powers over energy retailers to drive demand response. Energy efficiency programs could also help.

When SA suffered blackouts because of a 90 megawatt (MW) shortfall, demand was around 3000 MW. At that time, household cooling was probably over 1000 MW: an ongoing building and air conditioner energy efficiency program could have avoided the problem, as shown in the graph on the next page.

The gas crisis

A sudden increase in wholesale gas prices and the difficulties many industries have had even negotiating new gas contracts have uncovered chronic failure in gas policy. It has also exposed the reality that many former energy ministers and politicians work for the gas (and oil and coal) industry.

For decades, Australian governments have proudly described our low energy prices as a competitive advantage—which has led local industry to complacently maintain appallingly inefficient use of energy.

But governments have quietly supported an ‘open’ economy, including world parity pricing for oil and gas.

These two positions have never been reconciled. The recent gas crisis has exposed a lot of skeletons. The suddenness of the shift in east coast gas prices has shocked almost everyone.

Yet a 2014 study by Deloitte Access Economics1 predicted a multi-billion dollar shift in annual income to the gas industry from other industries, and over 10,000 job losses.

The gas problem has spilled over to electricity, as high-priced gas generation has replaced lower-priced alternatives, due to factors including Abbott’s war on renewables (see The Pears Report in ReNew 139) and closures of old coal generators. Logical policy would have assisted or required gas users to improve efficiency as markets were gradually exposed to global prices. But we have inadequately regulated, poorly designed markets. I

wasn’t surprised when the government intervened. A situation where Australians are paying more for gas than countries we export gas to clearly does not pass the PM’s ‘pub test’.

Energy efficiency and productivity— glimmers of hope

Most of Australia’s energy efficiency policies focus on providing consumer information and setting fairly weak standards for new equipment and buildings. Policies providing information on building performance at time of resale or lease are emerging.

For existing buildings and equipment, limited information and energy auditing programs dominate. The ACT, NSW, Victoria and South Australia offer financial incentives for some activities under their energy retailer obligation schemes.

While these programs have delivered useful savings, they fall well short of an optimum outcome for society. Many of the benefits they deliver are not even measured or costed, and levels of ambition are low.

“When SA suffered blackouts because of a 90 MW shortfall, demand was around 3000 MW. At that time, household cooling was probably over 1000 MW: an ongoing building and air conditioner energy efficiency program could have avoided the problem.”

Residential peak electricity demand for South Australia, 2015. This shows the activities contributing to household electricity demand at the times of summer and winter peaks, compared with their average contributions when annual consumption is divided by the number of hours in a year. Over the whole year, heating and cooling is a relatively small proportion of average electricity demand, but it is a large proportion of the (much higher) summer and winter peak demand.

Residential peak electricity demand for South Australia, 2015. This shows the activities contributing to
household electricity demand at the times of summer and winter peaks, compared with their average
contributions when annual consumption is divided by the number of hours in a year. Over the whole year,heating and cooling is a relatively small proportion of average electricity demand, but it is a large proportion of the (much higher) summer and winter peak demand.

To put this in context, Australia is supposedly trying to implement climate policies at least cost. Our energy efficiency policies deliver tens of millions of tonnes of emission reductions at costs of minus $20 to minus $200 per tonne of avoided emissions.

Put another way, they often offer benefit to cost ratios of around 8 to 1—saving Australians $8 for each dollar invested.

Yet the Emission Reduction Fund pays around $12 per tonne of emissions avoided. Yes, we have our National Energy Productivity Plan (with funding of $18 million), the $200 million NSW five-year plan and many others.

But we spend tens of billions of dollars each year wasting energy. And if we included the cost of carbon emissions, that waste would increase by more billions. We have the balance very wrong. One problem in mobilising improved energy efficiency and productivity is that decisionmakers rarely invest in energy saving measures costing more than two or three times their annual savings—a two or three year payback.

This is equivalent to delivering 30% to 50% annual interest. We don’t expect that from any other investment, including renewable energy.

There are lots of reasons for this that I’m not going into here. What interests me is that the potential to change this financially disastrous situation is beginning to take shape.


It is difficult to pinpoint the actual causes of energy waste in many appliances, buildings and industrial processes.

Traditional auditing and sub-metering approaches don’t pick up many less obvious problems. Even when a problem is identified, someone has to do something about it.

This costs money and time, and diverts focus from core activities. It involves risks, such as working with a contractor you haven’t used before or changing a process central to delivering your business income or your health or safety.

And you have to find the money upfront.

Sophisticated analytical techniques are emerging that reduce or avoid the need for physical energy audits and sub-metering. Dynamic real-time benchmarking against models that predict ‘ideal’ performance can identify emerging problems and alert operators.

Machine learning can identify the energy-consuming characteristics of each item of equipment to work out where energy is wasted as well as how much (see for example this CSIRO project:

These systems can calculate the cost of energy waste.

They can also offer businesses and households tangible benefits that are often worth far more than the value of the energy saved, such as avoiding failure of a production line.

Avoiding loss of a fridge full of food or avoiding the need to quickly replace a failed hot water service can avert a family crisis: what’s that worth?


Another changing dimension is the emergence of new financing options to remove upfront cost barriers, not just for energy efficiency investments but for renewables, storage and other options. Financing can be packaged with ongoing monitoring and management systems and other services.

More households and businesses are placing value on insuring themselves against price rises and reliability issues of conventional energy systems, while the costs of alternatives are falling and their userfriendliness is improving.

“When SA suffered blackouts because of a 90 MW shortfall, demand was around 3000 MW. At that time, household cooling was probably over 1000 MW: an ongoing building and air conditioner energy efficiency program could have avoided the problem.”


Innovation across many fields is transforming energy and resource requirements and fundamental business design for delivery of many products and services, and converting demand for products (and infrastructure) into services.

Online shopping, health care and many other services create remarkable changes. Distributed manufacturing, 3D printing, computerised design, prefabricated building and many other changes are transforming production.

Many also fit well with development of ‘closed loop’ resource use.

My awareness of these remarkable changes was raised recently by my involvement in writing a report for the Australian Alliance for Energy Productivity.

This report scans emerging innovations that may have a big impact on energy productivity and efficiency.

It is amazing how much is happening, even in Australia. There may yet be hope for Australia to become a low-carbon, successful 21st century economy!

Alan Pears, AM, is one of Australia’s best regarded sustainability experts. He is a Senior Industry Fellow at RMIT University, advises a number of industry and community organisations and works as a consultant.

This article was originally published in the Alternative Technology Association’s ReNew magazine ( Republished here with permission

  • trackdaze

    Why this mess?

    The Ludite Naysayer Party (LNP)

  • john

    I do remember well looking at a new soon to be marketed suburban housing estate.
    The layout was worked to maximize the number of lots and no thought was given to each lot having the ability to have a house built that would be able to minimize heat load in summer and heat gain in winter this was regarded as of no importance.
    The eve size for instance was envisaged at 600mm maximum this hardly gives any protection from the sun.
    If the layout of the real estate had been done to allow more energy efficient buildings to be built the outcome would have been far better for the residents and for the energy waste subsequently needed to over come the short sighted attitude.

    • Rod

      Even worse, infill can infringe on built houses that do have solar access and correct orientation.
      My biggest fear was two storeys on my North which would block my PV.
      I missed that bullet but got a row house (3 to a block) on my Northern boundary. To make matters worse they stuck a what looks like 7kW heatpump on their black roof!
      My tacked on sunroom which used to do a great job of heating the living end of the house is now 75% shaded when I need it most. GRRRRR

      • neroden

        Buy easements. Talk to the property owner and *buy easements*. That’s the only way to secure your situation when your neighbors may shade your property — pay to get an easement over their property.

        Only way.

        • Rod

          I tried to but the property years ago on a rent back agreement but her financial adviser advised her against it. Didn’t think about an easement.
          I didn’t really want another property but should have bought it and subdivided myself. I kick myself everyday.

    • Ken Dyer

      I am not convinced from my cursory document search that there exists Federal or State overarching subdivision building codes that require maximum orientation to solar for all buildings in a new subdivision, nor protection from overshadowing by subsequent construction in a subdivision. The requirement is at best fragmented across many local council planning documents throughout Australia, which means that developers can usually get away with building inefficient buildings that mitigate against capture of solar energy.
      At the very least, it should be mandated that every new building constructed in Australia should have at least a 5KW solar PV system installed. This is not currently happening. The cost – about $4000 for a basic system, very little when you consider the price of house and land packages. Easy win for new homeowners – the sun is free!

      • MaxG

        The last sentence is the problem: nobody wants that the consumer is saving money… the goal is to make as much of consumers as possible; hence, the name: consumer.

      • solarguy

        Hello Ken, tell me where are you getting the cost of a 5KW system to be only $4k. No one can buy the gear wholesale for that money.

        • Ken Dyer

          6.48KW installed $3499
          Brisbane metro area standard site

          • solarguy

            That will be a massive con, $8k is more like it for 5KW. What that price will be for is the equipment minus the STC’s then they add on the labour charge. A lot companies try getting punters in with these tactics.

          • Ken Dyer

            SG, I suggest your claims are well out of date. Send gpowerenergy an email and ask them to confirm their Internet quote to satisfy yourself. It is a very competitive market in Queensland.

            As for the $4000 figure, can you imagine how much a 5KW system would cost if you bought say 100 of them for a 100 house subdivision. Price would be way lower for a bulk buy I would think.

            In 2013, I paid $6590 for a 3.0 KW system with 12 250watt panels and an Enasolar 3 KW Inverter (Victoria) installed.

            I have just paid $6095 for a 6.38KW system with REC Twin Peak 2 – 290 watt solar panels with a three phase power Fronius Symo 5.03 battery ready inverter (Queensland) installed.

            So, After 4 years I paid 7.5% less than 2013 prices for a 102.9% increase in KW and increased inverter functionality.

            And it looks even better because solar prices have decreased in relation to inflation (about 2.5% per annum) based on my figures.

  • George Darroch

    Slightly off topic, but are any operators using ice-thermal storage in Australia?

  • Brunel

    I am afraid the ALP is not fantastic either. Was land reserved in Docklands for a school oval?

    Yet the state ALP spends $60 million per year to host an F1 race!

  • John Boland

    Allan is correct in stating the following:
    “an ongoing building and air conditioner energy efficiency program could have avoided the problem”
    The trouble is that the present energy ratings system is geared to minimise overall energy use, and the most consistent energy use is in the winter. So one can have a high rating house design and still have heat stress in the summer, thus requiring aircon. If anyone wants reference to work on this, contact [email protected]

  • Miles Harding

    Agreed that there is progress and some cause for hope that Australia will transition to a low carbon economy.
    This is made all the more surprising when we consider that the federal govenment is doing all it can through a combination of ignorance, ineptitiude and malice to delay and derail this necessary transition.

    Of particular concern today is the federal government’s announcement that our energy problems could be solved by simply allowing unrestricted on-shore gas development. (ABC news)

    More commonly, this is called ‘fracking’ and carries enormous risks of undesirable outcomes. Damage to aquifers and unwanted methane emissions stand to make gas fracking much more damaging than burning coal**.

    This is principally driven by a (not so) covert agenda to avoid the transition to a sustainable way of life because some incumbent’s business activities have no place in this sustainable world and those businesses lack the foresight and gumption (Elon Musk’s word of the week) to take these challenges as opportunities and explore the new territories before them.

    **One thing the LNP loves is an opportiunity to blame those troubling farmers and greenies that can see this obvious problem. Nobody seems to mention that this ‘fix’ only serves to delay the inevitable by a few years, at which time the remedy will be more expensive and disruptive.