Demand response trials could open up more than 1 gigawatt of extra grid capacity

Energy management companies Enel X and Viotas have both received a green light to run five-year trials to test how large industrial sites can be paid for shifting or reducing their peak energy demands, and beef up a market that could create 1 gigawatt (GW) of spare grid capacity.

The Australian Energy Regulator (AER) has granted waivers from market rules so the two companies can test how 20 sites with multiple grid connection points can participate in the demand response space, all without forcing the market operator to change any of its own systems.

The two trials of 10 sites apiece will provide critical case studies for a rule change request Enel X made in 2022, and to allowing the massive new data centre industry deliver on some of its promises around grid stability.

The multiple grid connection sticking point is why some of the biggest energy users in Australia, including manufacturing plants, ports, logistics hubs, water treatment facilities and data centres, are barred from being paid for demand response.

The rules aim to stop those sites gaming the system by artificially lowering usage at one connection point while increasing it at others, to get paid for demand response services that were not truly provided.

The issue is that this type of market manipulation is theoretical at best, because right now no one’s quite sure how the market operator’s systems will handle multiple connections, says Enel X Australia managing director Carl Hutchison.

He says no one objects to these sites offering up demand response services and being paid for it, but they need to figure out how to fit that into the Australian Energy Market Operator’s (AEMO) systems. 

“Demand response is going to increase as all of these new resources come on,” Hutchison told Renew Economy.

“Consumer energy resources and data centres are going to mean the amount of flexibility in the grid should ramp up, so that number should increase.”

Hutchison confirmed they still expect there is at least a gigawatt of latent demand response available from Australian, with much more on the way as bigger, flexible electricity load centres join the grid.

Even data centre operators have come around to the idea of providing some demand response services, with Nextdc’s Shayne Kumar saying they could absolutely help out, albeit by using their backup diesel generators to limit grid power use.

Enel X now has 329 megawatts (MW) from 214 industrial sites registered with the market operator as flexible demand response, up from around 200 MW around the same period last year.  

Viotas has 16 MW of demand response units registered with the regulator from two sites. 

Building case studies

Tweaking the rules to unleash Australia’s still-undercooked demand response market has been a mission for Enel X since at least 2022, when it first made a rule change request to the Australian Energy Market Commission (AEMC).

It would love to see a permanent change to the multiple connection ban, remove a requirement that distribution network service providers must endorse aggregation, introduce baselines incorporating automatic ‘low load’ exclusion days in eligibility tests, and create baseline eligibility tests at an aggregated portfolio level.

The market operator, however, was worried that rule change would need it to change its standard baselining and settlement systems to make it work. 

The two trials are proposing workarounds that don’t need AEMO to make any changes, and Hutchison says they’ll provide a neat case study to support the rule change request.

“This is just a chance to prove in real life that what we’ve been saying for quite some time is true. There’s no reason to keep these loads out of the market, because it’s usually the big industrial loads that have these multiple connection points,” he says.

“That means these sites can be in the WDRM market permanently.”

The trials will measure the customer response across all connection points to ensure there are genuine demand reductions.

AER board member Jarrod Ball says greater use of demand response could reduce the amount of investment needed to build out the grid, and give the AEMC “a diversity of useful evidence” from 20 different sites.

The first two sites have to be endorsed by AEMO and operating within the next six months.

The decision to give two rival companies waivers from the rules at the same time was to “generate competitive tension” and hopeful deliver better outcomes.

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