Australia Turns to Demand Response to Bolster Grid Reliability
Last summer, intense heat waves in Eastern Australia led to a series of power outages. As temperatures soared into the 40 degree (°C) range, on two occasions the Australian Energy Market Operator (AEMO) instructed power companies to switch off customers’ supply to reduce some of the strain from the high demand, a process referred to as load shedding. Thousands of homes and businesses found themselves without power temporarily during the evening peak demand period. Despite having enough installed generation capacity to accommodate demand in Eastern Australia, the effects of weather meant insufficient generation was available at the time of peak demand: a lull in the wind saw reduced wind generation output, and the extreme heat caused unexpected outages and reduced output at a number of coal and gas fired generators.
Australia is expected to face more extreme weather this summer, and AEMO has indicated that the supply/demand balance will again be tight at times, particularly during heatwaves. AEMO has a number of initiatives underway to support reliability for the upcoming summer, including a new demand response (DR) trial run in conjunction with the Australian Renewable Energy Agency (ARENA) and with the support of the NSW Government. ARENA has committed $35.7M over the next three years to fund a demand response trial, aiming to secure 143 MW of capacity by the coming summer, growing to a total of 200 MW by 2020.
As one of eight participants in the trial, Enel X has been awarded a capacity of 50MW to develop a new demand response resource that will help AEMO avoid the need for load shedding when the grid is under stress. Within 10 minutes of receiving a dispatch signal from AEMO during a grid emergency, Enel X will initiate load curtailment from large commercial and industrial energy users who have agreed to pitch in to voluntarily and safely reduce their demand for a short period of time. These energy users receive financial incentives for participating in the programme and helping to ensure that the lights stay on for their neighbors.
Research from ClimateWorks Australia shows that, if fully utilized, demand response could reduce overall peak demand in Australia's National Electricity Market (NEM) by 10%, equivalent to twice the capacity of the recently retired Hazelwood coal-fired power station. ARENA's investment in a demand response trial is a great first step that should help kick-start a market for demand response in Eastern Australia, and should help ensure the lights stay on all summer.