“Stunning example of market working:” Households embrace free power offer, causing major spike in demand

Households are snapping up offers of three hours of free power, both in the Solar Sharer-governed states of South Australia, New South Wales and Queensland, where the offer launched in July, and under Victoria’s Midday Power Saver offer, which launched just two weeks ago.

How do we know? As Renew Economy reports here, because the chief of the Australian Energy Market Operator, Daniel Westerman, confirmed as much at a Sydney energy conference this week.

“At exactly 11am every day, electricity demand jumps up,” Westerman told the summit. “Right now, that demand jump is around 360 megawatts (MW) across the NEM, and it’s been growing over recent months.

“11 am is the start of free power periods under some tariffs, and clearly many households are choosing to automate when they charge their batteries and vehicles and run their appliances.”

Westerman explained that the success of Solar Sharer in its various forms – there are a range of different default and retail offers – is also connected to the success of federal Labor’s Cheaper Home Batteries scheme.

There are now more than 500,000 discounted storage systems installed through the scheme and homes with batteries are likely to be make up many of households opting in to store and shift free power.

“While the numbers aren’t precise, we estimate that between 15–25 per cent of home batteries may be responding to market signals in various ways,” he said.

Westerman’s comments also caught the ear of Hamish McKenzie, the deputy director of climate and energy at the Grattan Institute, who did some of his own research on the Solar Sharer phenomenon and found some even more impressive results.

McKenzie confirms that the spike in demand that starts to show up on energy market dashboards starting at 11am “varies a lot” from state to state and day to day. But he adds that “on most days it’s clear to see,” and offers a “particularly obvious example” from a few weeks ago in Victoria.

The chart, shared on LinkedIn on Wednesday, shows that on Friday August 28, demand spikes by more than 700 MW within 30 minutes of the clock striking 11am in Victoria – nearly double the average Westerman mentioned.

This is particularly interesting because it’s taken from before Victoria’s default Midday Power Offer was officially launched, requiring all retailers to offer an opt-in version of three hours of free power.

As McKenzie points out, this means that either there was no shortage of free power offers on the market already in the state in the lead-up to October, or that something else is at play.

“Daniel Westerman attributed it to batteries being programmed to switch on, but it’s not clear to me that’s what it is,” adds McKenzie.

“Perhaps AEMO has data on this or has disaggregate meter load data, but this demand spike could just as easily be hot water systems, EVs, really anything switching on at 11am.

“Either way, a stunning example of the market working. Give people a signal, make it easy to respond, and they will.”

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