By Michelle Goldsmith
The way Australian consumers use electricity is changing, and all indications suggest that it will continue to do so into the future. As consumer behaviour evolves, so too must the energy sector, shaping the face of Australia’s future energy grid.
The future grid may be closer than we think, with many power utilities already preparing for the future by trialling and adopting new programs and technologies to manage demand.
Various predictions emphasise a variety of possible scenarios for the future grid, emphasising the importance of innovative technologies, consumer choice and demand management.
Energy use for the future: managing demand
Demand management features heavily in energy utilities’ preparations for the future grid. Of particular interest are periods of peak demand, such as hot summer days, when energy use is at its highest and the grid is under the greatest pressure. Managing peak demand keeps network utilisation stable and manageable and prevents network reliability issues. This in turn keeps the cost of electricity to the consumer stable by preventing or delaying the need for capital expenditure on additional infrastructure to cater for periods of high demand and cost stability reduces the likelihood of price hikes associated with scenarios where electricity supply is unable to keep up with electricity demand.
One extensive study into the future of the Australian grid – the CSIRO Future Grid Forum’s report, Change and Choice, focused on formulating possible alternate scenarios regarding the way Australian consumers will use electricity in the near future and examining the resulting changes to the energy sector for each of these scenarios. The forum concluded that in reality, the future of the Australian energy grid will probably involve aspects of various scenarios, including consumers adopting alternative tariffs based on peak demand management.
The Future Grid Forum also predicted an increase in consumer engagement with their energy use in the future and that this would be a key driving factor in shaping the future of the energy sector.
Consumer engagement and participation are vital to demand management, and therefore any demand management program requires understanding of the drivers behind consumer energy demand. This allows for it to be influenced through various means, such as incentives and education.
The following energy utilities have each adopted different programs and conducted various trials to achieve this end.
SP AusNet: tariff incentives for large businesses
Starting in 2010, SP AusNet has been running a Critical Peak Demand (CPD) program focusing on large businesses.
The program provides SP AusNet’s large business customers (those consuming more than 160MWh of electricity per year) with the incentive to cut their electricity consumption for four hours on five days of high network demand by calculating their average peak demand on those days to determine the ‘critical peak demand component’ of the businesses’ tariff for the following year. This means that businesses that significantly reduce their energy consumption during the preselected CDP days benefit with reduced energy costs.
In turn, the reduced electricity consumption by these businesses on the CPD days significantly reduces energy demand during the times when the network is under the most pressure.
SP AusNet reflects that the greatest challenge of the program has been making sure customers are aware of, and adequately understand, the CPD program. As the program requires active participation, the more large business customers are aware of it, and understand what it involves, including both the direct and indirect benefits it provides, the greater impact the program will have.
The figures for SP AusNet’s 2012/13 critical peak program showed that 1,333 of the 1,977 businesses participated, reducing peak demand by 42 MW, the annual peak demand equivalent of 8,500 households. Seven out of ten businesses managed to reduce their demand on the nominated CPD days and 181 large business customers reduced their demand by more than 40 per cent. This represents a significant reduction in demand on the grid during these periods.
Peter Milburn, General Manager at independent energy management consultancy Utilacor, is a strong advocate of the CPD program.
Utilacor’s clients come from a wide range of industries where power use makes up one of a company’s most significant costs, including manufacturing, irrigation, produce growing, food and beverage, wine and cold storage.
“Since the inception of SP AusNet’s Critical Peak Demand program, Utilacor has recognised the benefits available to its clients through active demand response and participation,” says Mr Milburn. “Accordingly, we have actively sought to educate clients on how to benefit from the tariff structure, together with moving businesses to appropriate tariffs to heighten cost reduction.”
“Our kWatch system and expert staff assess the incentives and benefits offered by the program so that large energy users appreciate the opportunity made available to them by SP AusNet’s CPD program; though we also ensure that they are appropriately equipped with strategies, technology or operational tools to maximise realisation of the incentive offered.
“Utilacor has also found that in addition to the financial benefit achieved, customers become engaged in active energy management and start to truly understand the triggers that drive their billing and costs resulting in cost reduction achieved in other ways,” he says.
“Utilacor continues to promote and educate the Critical Peak Demand program to more and more customers, and has a team of experts to assist customers appropriately engage in the program.
“We remain strong advocates of the Critical Peak Demand program offered by SP AusNet, appreciating that it offers benefit to both large energy users and SP AusNet through appropriate response to network demand constraints.”
United Energy: voluntary peak demand trials for households
Early this year United Energy began a voluntary peak demand management trial called the Summer Energy Demand Trial. This program aimed to investigate the impact of households voluntarily trying to reduce their energy consumption during peak demand periods by analysing participating households’ smart-meter data. The rationale behind this trial was that small changes in energy use may have a large impact if widely adopted.
The test area, Bulleen/Lower Templestowe in Victoria’s eastern suburbs, was chosen because the network infrastructure for the area will require around $1million of upgrades to meet demand within the next three years if demand increases as expected.
Participants were also able to view their own results via an online portal, and those who reduced their demand received incentives for each event day.
The first trial showed extremely promising results. Thirteen households participated in the pilot program and a total of one event day was held. During the set periods there was a 32 per cent reduction of demand across participating households as compared to similar 35-40OC days. One customer even managed to reduce their peak demand by 66 per cent.
Customer feedback suggested that the web portal was an important factor in the results, as customers got a feeling of control and satisfaction from viewing their results and competing with the other participating households.
A spokesperson from United Energy said the results were “remarkable” and the reductions were “far beyond expectations”.
United Energy states that the greatest challenge in this trial has been, and will be, making the trial known to customers – building confidence and truly engaging with customers so they not only accept the trial, but actively want to take part.
Responses from participants of the first trial were positive. One participant said the event was “easy” and that she would readily have done it for longer than required.
United Energy intends to continue running the trial over three years. All indications suggest the program is increasing in popularity. It looks set to be adopted on a much wider scale next summer with over 50 households already having signed up to participate.
United Energy considered the pilot results “a sign of things to come” and intends to consider the data gained over the three years when formulating possible demand management programs for the future.
Transgrid: hybrid energy systems and peak demand response
TransGrid, the company responsible for the high voltage electricity network in New South Wales, has invested in a number of successful demand management and response programs.
TransGrid, in collaboration with demand response provider EnerNOC, claimed the top award in the Best Demand Response category of the 2013 Energy Efficiency Council Awards, for a peak demand management initiative which involved more than 80 sites across Sydney. The project, which encouraged users to shift consumption outside peak periods, saw an average usage reduction of 600kW per site.
EnerNOC is a leading provider of energy intelligence software and related solutions for demand-side management.
“Our strong partnership with EnerNOC made it possible for TransGrid to leverage existing relationships with Sydney’s large energy users, to trigger changes in power use when peaks were forecasted,” TransGrid Managing Director Peter McIntyre said.
TransGrid has a stated aim of leading the way for Australian transmission companies in demand response as part of its wider asset investment strategy.
“TransGrid is a proven leader in innovative demand-side management, integrating demand response into its network planning and development of major projects,” said Christian Weeks, EnerNOC Australia and New Zealand Managing Director.
In 2014 TransGrid announced its iDemand project. iDemand is an innovative, hybrid energy-system project aimed at investigating better management of peak demand through a combination of on-site energy generation, storage and efficient energy use.
TransGrid is trialling iDemand on its own headquarters in western Sydney. The primary retrofit involves the installation of almost 100 kW of solar panel capacity on top of the site carpark to harness solar energy for immediate on-site use. Lithium polymer batteries with a 400 kWh capacity will store energy during off-peak periods for use at times of higher demand. The site will also be fitted with energy efficient LED lighting.
Construction of the iDemand project is expected to be completed in September 2014 and is expected to result in a 50 per cent reduction in total on-site peak demand during summer periods. This will be equivalent to removing almost 40 households from the grid on a typical summer weekday.
The system will also include an integrated IT interface which will provide opportunities for research collaboration with universities, and enable real-time data displays of daily demand reduction and the outputs of the solar panels and batteries.
The data and outcomes of iDemand will be available on TransGrid’s website for public viewing.
In November and December 2013, TransGrid asked consumers what they thought of the company investing in demand management innovation. Responses were generally very supportive, because reducing peak demand on the network in turn reduces the investment that TransGrid needs to make, which in turn reduces the network charges that influence customers’ bills.
However, it was found that many consumers still do not understand industry or investment drivers such as peak demand, and are looking for more information about how to reduce their electricity use.
According to TransGrid, the greatest challenges in any demand response program are those involved in tailoring the solution to fit the key requirements for its success.
The demand response must be:
• In the right place. The response needs to occur in the area of network constraint; if support is to be provided at a sub-optimal location its magnitude must be greater.
• At the right time. The response must occur at the time the network is under the most pressure to be effective.
• Of a relatively large magnitude (megawatts).
It is hoped that the results from the iDemand trial will be instrumental in energy research, and the program will provide potential for market development, offering businesses the opportunity to retrofit their work sites with similar systems.
TransGrid considers that demand management and demand response will continue to be a vital part of transmission network planning in NSW. Demand response can be a cost-effective option for deferring or avoiding investment to augment the network, and also a useful tool for managing exposure to the volatility of energy demand.
Due to changing patterns of demand and existing capacity of TransGrid’s network, there are no immediate constraints that require a demand response solution. However, recent variations have been more extreme than expected, so in order for sufficient demand response to be available when it’s needed, TransGrid is continuing to invest time and effort in developing the market to better enable successful implementation of demand response solutions.
TransGrid envisages that a deep demand response market will become a vital aspect of a flexible and robust future grid.
The company intends to continue to undertake to minimise the impact of its network where it can otherwise meet its transmission service obligations, including through the use of non-network alternatives such as those in the iDemand retrofits.
In the past TransGrid has also invested in research and projects to better understand consumer attitudes and behaviours regarding electricity use, and how these can be leveraged to optimise investment decisions. TransGrid would like to continue this work and is therefore currently preparing an application to the Australian Energy Regulator for a ‘demand management innovation allowance’ into the next regulatory period.