A new demand response trial will see tech firms, renewable storage firms and energy retailers collaborating on $35.7 million worth of projects delivering 200 megawatts of dispatchable energy capacity by 2020.
Under the pilot, energy users – ranging from households and small businesses through to large industrial users – will be paid for the “negawatts” they generate, whether they reduce direct consumption, switch to back up generation or dispatch their own stored energy into the grid for short periods.
Launching the program, federal environment minister Josh Frydenberg said building a new power stations was not always the best solution to securing energy supply.
It also showed the government’s commitment to reducing carbon emissions, he said.
This stance reinforced criticisms Mr Frydenberg levelled at Tony Abbott at the start of the week, for comments made at a Global Warming Policy Forum speech in London.
“Well, climate change is real,” Mr Frydenberg was reported as saying. “We take our advice from the scientific experts. We believe we need to reduce our emissions. That is why Tony Abbott signed up to the Paris agreement.”
In another report, he said the government was acting on the Paris commitments through “a whole range of different mechanisms”.
The demand response initiative was an example, he said.
“The point here is we want the lowest cost solution and building new power stations may not always be that solution,” Mr Frydenberg said.
“This is a voluntary program. That’s the key here. Households, businesses are asked to enter into voluntary arrangements only if they want to and only if they want to be paid for their contribution.”
The demand response pilot is a partnership between the Australian Renewable Energy Agency (ARENA) and the Australian Energy Market Operator (AEMO).
The federal government has contributed $28.6 million in total through ARENA to support 10 projects across Victoria, South Australia and NSW. The NSW government has pledged $7.2 million in matched funding for NSW projects.
Over its three-year term the initiative is expected to deliver 200 megawatts of dispatchable energy capacity by 2020, with at least 143MW to be available this summer to assist with managing peak demand events.
The project opened for expressions of interest in May, and ARENA chief executive Ivor Frischknecht said the funding round had well exceeded the 160MW initially hoped for, and cost less than expected.
“Through this initiative, we’ve been able to build a virtual power plant the size of two of Tesla’s giant 100MW batteries in a matter of months for a fraction of the cost of building new supply,” he said.
“Demand response will not only ease the strain on the electricity grid and prevent blackouts. These projects will also put money back into the pockets of Australian businesses and households, helping to reduce their energy costs and emissions.”
Leveraging the negawatt
The principle of demand response is leveraging the “negawatt” – encouraging energy users to reduce demand where possible when the grid is under pressure, so the freed up capacity can be deployed elsewhere.
“We are also trialling an innovative range of technologies and behaviour change programs from voltage control to intelligent thermostats to app notifications,” Mr Frischknecht said.
AEMO managing director and chief executive Audrey Zibelman said the projects would undergo testing by AEMO in November and would be up and running by December 2017.
“These demand response projects will help manage spikes in peak demand in a cost-effective way using our existing electricity infrastructure and clever new technology,” Ms Zibelman said.
“It is clear that demand response has untapped potential to manage demand during extreme peaks in Australia, just as it does in other countries.”
She said AEMO was hopeful the pilot would create “the proof of concept for a new market mechanism that will ultimately be to the benefit of Australian consumers”.
Some of the specific initiatives that were successful in winning funding include Victorian smart thermostat developer Zen Ecosystems, which will be deploying its smart, connected and controllable thermostats to business customers. In partnership with insurers and retailers there will also be both voluntary and load control programs made available for residential energy users.
The technology, which is manufactured in Victoria, enables control of airconditioning, heating and ventilation systems. Its installation as part of the pilot is expected to result in 5MW of demand response capacity.
Powershop secured $1 million to run a behavioural demand response program called Curb Your Power. This will involve a mobile notification system for Victorian retail customers that will offer customers a financial incentive to reduce energy use for between one and four hours at a time.
It will also be able to draw on 1MW of Reposit enabled batteries installed in Powershop customers’ homes and on a 1MW co-generation facility at Monash University as a backup to achieve a target of 5MW of energy capacity over 2017/18.
Energy Australia will be expanding on its existing pilot projects with WattWatchers, GreenSync and Redback Technology. It will be signing up industrial, business and residential customers across NSW, Vic and SA, and using WattWatcher’s remote monitoring and load curtailment devices coupled with GreenSync’s virtual power plant technology for aggregating demand reductions along with Redback’s smart battery storage systems.