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Dispatching “NegaWatts” by the Market Operator

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Energy Users who participate in this category of Demand Response follow dispatch instructions from some third party in response to some form of pricing signal.  That’s different than these other methods, where the price response is triggered (dispatched) internally.

Even within this “third party dispatch” category, the dispatch could come in the form of:
1)  Dispatch of Consumption; or
2)  Dispatch of “Negawatts”, with “What would have otherwise been Consumption” not dispatched – where dispatch might be by the AEMO (as discussed on this page) or by a Retailer.

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As noted here, the there is currently (as at Dec 2018) no method supported in the NEM which would allow for a party that is separate to the contract for underlying energy consumption at an Energy User’s site to dispatch a notional NegaWatt response.

The fundamental reason for this is that such separation would rely on the creation and then separation of two separate hypothetical (but not measured) traces related to an Energy User’s consumption:
Trace #1 = the hypothetical “Demand that would have otherwise occurred” (which cannot actually be measured, but which is generally established through some form of baseline methodology);
Trace #2 = the “what actually happened” net demand trace, which can be measured; and
Trace #3 = the assumed (NegaWatt) Demand Response (which again cannot actually be measured, but is calculated as the difference between the assumed Trace #1 and measured Trace #2)

To separate the dispatch of the NegaWatts from responsibility for the underlying energy consumption means that different parties would each then have commercial outcomes related to intangible/hypothetical measures:
1)  The Retailer’s contracts would be with reference to Trace #1; whilst
2)  The provider of the NegaWatts in the wholesale market (whoever that might be called) will be referenced to Trace #3.

Over the years that the NEM has been in existence, several reviews have been conducted of the need to create such a separation – including the following:

Assessed by AEMC

2018-???

On 15th November 2018 (as noted here) the AEMC invited submissions in relation to three different proposals relating to NegaWatt mechanisms in the NEM.

Following from this, we posted some comments and observations here on WattClarity [TO COME].

When this assessment is concluded by the AEMC (whatever the outcome) we will include coverage of it here [TO COME].

Assessed by AEMC

2015-2016

On 9th November 2015 (as noted here), the AEMC released a consultation paper on COAG Energy Council’s proposal to create a demand response mechanism.

We posted some comments on WattClarity:
(a)  On 23rd June 2014, about how prices would have been set under the NegaWatt mechanism as it had been designed by the AEMO at the time; and
(b)  On 26th November 2015, about the three separate (but related) rule change proposals on the AEMC’s desk at the same time.

Following from their deliberation, the AEMC concluded not to implement such an arrangement.

It’s important to note that the AEMC’s deliberations included an assessment by consultants Oakley Greenwood (in September 2016) that identified the existing presence of demand response in the NEM.

Earlier There were earlier changes mooted, which will be added to this table as time permits.