Massive demand response contract to boost flexibility in world’s most isolated grid

Enel X Australia has won a two-year contract to supply 120MW of flexible demand capacity to the Western Australia energy market, as the market operator looks for new and more efficient ways to balance the world’s biggest isolated grid.

Flexible demand describes the coordinated orchestration of electrical load in response to generation, network, or market signals, to ease pressure on the grid during periods of high demand by shifting usage to non-peak times.

The contract, awarded by the Australian Energy Market Operator, will see Enel X recruit commercial and industrial customers in WA to participate in the Non-Co-optimised Essential System Services (NCESS) program via a virtual power plant, or VPP.

Enel X says the demand response customers will commit to curtail the consumption of a set amount of electricity when called upon – a service it says may only be required a few times each year to keep the lights on in emergencies.

Curtailing demand for short periods is also a much better alternative to switching back on aged and polluting fossil fuel generators.

“The energy market needs new ways to provide extra capacity at peak times to balance renewables, and businesses need new ways to reduce energy costs,” says Enel X country manager for Australia Carl Hutchinson.

“The Enel X VPP achieves both those goals, by orchestrating large energy users to curtail their energy usage for short periods a few times each year, in return for revenue.

“This approach to balancing supply and demand is much easier and cheaper than building new transmission infrastructure and generation assets, for the few occasions it is needed,” Hutchinson says.

For AEMO, the demand-side solution will add a valuable new tool to its kit for managing Western Australia’s isolated and complicated main grid, the South-West Interconnected System (SWIS).

One of AEMO’s biggest headaches at the moment in WA is managing the huge grid fluctuations in the state, which can see it swing from record lows in demand during the day – thanks to record supply from rooftop solar – to spiking peaks in demand as solar drops out of the system in the evening.

AEMO is signing contracts with the developers of big batteries – including Neoen and Alinta – to address some of the variability by soaking up solar in the middle of the day and pushing the output back into the grid in the evening peak. Synergy is also building another two huge batteries for much the same purpose.

In August, the market operator warned that the SWIS was facing a electricity supply shortfall of 945MW in 2025/26 and around 4,000MW by 2032-33. Just a year ago is was predicting a shortfall of just 303MW by 2031/32.

To address that potential shortfall, the WA government is delaying the closure of one 200MW coal unit – Muja C at Collie – by six months. It will operate in reserve capacity over the summer of 2024/25 and will operate if needed.

But WA Labor, which is has committed to closing all coal by 2030, will be hoping that the 120MW demand response contract with Enel X – which runs from 2024 to 2026 – will help the state avoid reverting back to coal.

“This is a good opportunity for businesses to support grid reliability as we undergo the transition to new, lower-emission sources of supply and manage the phase out of state-owned coal-fired plants,” said state energy minister Bill Johnston on Tuesday.

“Western Australia’s main electricity grid … needs new forms of power capacity to keep the energy system stable and to keep the lights on during critical times.

“Demand Side Management is an essential part of all modern energy systems; it is a good time for the SWIS to take advantage of this important initiative.”

In a LinkedIn post on Tuesday, Enel X Australia’s business development manager Jamie Catt said the contract was “a natural tender for Australia’s largest VPP operator to be awarded!”

Earlier this year, Enel X Australia was awarded $3.7 million from the federal government’s Arena to launch a demonstrator project that will use commercial refrigeration systems around the country to provide flexible demand to the grid.

For this project, Enel X will recruit 440 commercial refrigeration facilities to deliver flexible demand capacity to support Australia’s renewable energy transition.

Enel X said at the time that commercial refrigeration facilities across supermarket, grocery, beverage, convenience, and last-mile logistics could alone offer an estimated 500MW of potential flexible demand across Australia’s National Electricity Market.

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