Demand response pilot kicks off with $22.5m funding round

The Australian Energy Market Operator’s plan to get 100MW of demand response capacity up and running in the Victorian and South Australian markets in time for the summer peaks and heatwaves has been set in motion, with the launch of a $22.5 million competitive funding round by ARENA.

The auction, launched on Thursday, will see the Australian Renewable Energy Agency provide grants to trial demand response technologies and implementation models over three years.

First announced last month, the joint AEMO-ARENA initiative will provide around 100MW of demand response capacity which can be called upon during grid emergencies and extreme peak demand days, to avoid involuntary load shedding.

There is also the potential for the pilot program to be scaled up and expanded with funding from state governments.

In a statement on Thursday, ARENA said the funding round would be open to a wide range of technologies and methods, ranging from demand response aggregators to smart thermostats to battery storage and behavioural demand response projects.

The grants will also fund technology that enables energy users to become demand response-enabled, including metering, monitoring, storage and distributed generation equipment and other set up costs.

If demand response providers are activated, AEMO will also pay for usage through its existing Short Notice Reliability and Emergency Reserve Trader (RERT) scheme.

As noted when the pilot was first flagged, the move 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 a big fan of demand response, which was one of the major levers 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 comments on Thursday, ARENA chief Ivor Frischknecht said ARENA’s funding would help to bridge the technology gap in Australia between innovation and commercialisation, and would support grid security and stability needed to enable more renewable energy.

“With this pilot program, we want to find smarter, more affordable and more efficient ways of managing peaks in demand, relying less on fossil fuel generation we only need a few days a year, “ he said.

“A well-designed demand response program can make better use of our existing electricity infrastructure, reduce energy costs for consumers and reduce emissions.

“(It) will allow us to manage demand in real-time and provides us with a safety net in case of emergencies,” Frischknecht said.

The design of the initiative has been informed by consultation with industry stakeholders, including an A-Lab innovation workshop held in May, and a Request for Information which received more than 50 responses.

The funding round closes at 5pm on 10 July 2017. Key funding documents – including the funding announcement and funding agreement – are available on ARENA’s website.arena.gov.au/funding