The electricity market – friend of foe?
We are all aware that the electricity market is changing and renewable sources, such as wind and solar, are now supplying almost 25 per cent of our year-round electricity. As we start to increase that percentage of renewables consumption, will it increase the cost of electricity, and what can customers expect to be dealing with in the future?
In countries like Ireland, they have about 47 per cent penetration of renewable energy, requiring a very fast-acting curtailable load to help secure and stabilise the grid and allow more renewable energy to be used. Such loads are actively sought, and well paid to curtail. Batteries are participating in these services, as are cooling and heating loads, pumping, aeration, milling and many others. The Irish market has had to pay a premium for these faster services, and we believe these will also be required in Australia in the not-too-distant future.
The fastest response in our market currently is six seconds, and once curtailed it has to stay off for up to one minute. A two-second market has been proposed where loads will need to be switched off within two seconds and stay off for six seconds. Such speeds require technology to monitor the frequency and to activate the curtailment process once a trigger setting is reached.
There are also more opportunities opening up for curtailable loads where customers get more time to curtail, but the curtailment event can be anywhere from a few minutes to several hours. The Reliability and Emergency Reserve Trader (RERT) program is a case in point; it has been available to customers for about five years. Within this program customers have about one hour notice but may need to curtail loads from 30 minutes to four hours at a time. RERT is a summer program, although it was also recently used in Queensland the Callide Power Station was offline for three weeks.
The Wholesale Demand Response Mechanism is another program. Starting in late October this year, the 24 x 7 year-round program gives customers five minutes to curtail load and that curtailment may last from five minutes to a few hours.
We see a future in the Australian electricity markets where energy will be very cheap, but other associated services will be increasingly expensive. So, customers may not see a drop in electricity bills at all. The attraction to participate in the frequency markets and RERT is that the cost of these programs is spread across all customers in the state according to the size of each customer’s load. Customers with larger loads will pay the most, and will have the greatest opportunity to participate in these programs and be handsomely compensated. It’s a way to turn a foe into a friend.
Zammit has an extensive utilities background, spanning over 30 years working for and with utilities as a professional engineer, marketer, manager and consultant.
He was appointed as Managing Director of Energy Response, Australia and New Zealand’s most successful demand response (DR) aggregator, in 2004 and led the company from commercial inception through to its acquisition by EnerNOC Inc (now Enel X), in 2011 for $34million.
Before joining VIOTAS, he was the Demand Response Manager for Commercial and Industrial Customers at AGL.
Zammit holds a Bachelor of Electrical Engineering Degree (Power) and Bachelor of Business Administration Degree, both from Monash University.