AEMC release “Demand response in the National Electricity Market” report

In mid-December, the report “Demand response in the National Electricity Market” was released. Prepared by Energy Synapse for the AEMC, the report attempts to identify current and potential characteristics of availability and other key features of demand response in the NEM. The report was commissioned as the AEMC, AEMO and Energy Security Board are currently investigating the potential mechanics of a two-sided energy market that could have important implications on how demand response will be employed in the NEM.

In a related manner, the Energy Security Board yesterday released their January 2021 directions paper which sets out the reforms to be pursued to the next stage of their national electricity market redesign project.

 

Readers here might find these perspectives from Energy Synapse of interest.

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Quick Notes from us (i.e. Global-Roam Pty Ltd)

Readers should also keep in mind the following quick perspectives, from a scan of the Energy Synapse report:

1)  The report mentions a ‘Stakeholder consultation process with electricity retailers and aggregators to gain a first-hand account of how demand response is being implemented in the NEM.’ … but note that:

(a)  we were not included in the consultation (we’re a Software Company, not a Retailer or Aggregator, so don’t fit in either box – but we have been active in facilitating Demand Response in the NEM for >15 years).

(b)  we raise this point to flag that there are others who were not consulted (or who did not respond) so readers should be wary of drawing the wrong conclusions when the report concludes that ‘at least 412 MW has been activated in the NEM over the past three years’

(c)  For instance, it’s not apparent in the report that Wholesale Market Customers were considered … there are a number of those in the NEM (with SA Water being one example).

i.  These Wholesale Market Customers typically utilise Demand Response in various forms.

ii.  Peak simultaneous consumption across all of these is greater than 412MW … not all of which will be engaging in Demand Response at a particular point in time (at least in part because each is exposed to their own regional price).  However it is useful to keep this in mind.

2)  The report talks about the Barriers to Demand Response that the survey participants have encountered.  In that context, here’s an article from January 2019 about the barriers we have experienced.

3)  Also useful to remember that AEMC previously commissioned Oakley Greenwood to investigate a similar kind of question back in 2016, with these being some of the conclusions in that report.

4)  Finally, also useful to keep in mind that ‘Demand Response’ is a means to and end, in terms of balancing supply and demand at lowest cost.

(a)  This means that mechanisms to promote more price responsiveness on the demand side would also deliver great benefit in increasing consumption when prices are low (and especially negative).

(b)  A (myopic) singular focus on ‘NegaWatts’ is not going to do that.