Ecogeneration magazine December 2019 - Energy Transition feature

1. ENERGY TRANSITION
In the future, energy dilemmas will be solved at a local
level via the orchestration of micro, nano and perhaps
even pico-grids, writes Shaun Scallan.
Demand response for
a two-sided market
PHOTO:TRAIMAK/SHUTTERSTOCK.COM
Shaun Scallan
is institutional
program
manager at
Planet Ark
Power.
I
n an ideal world energy policy and
regulation would support effective
outcomes for all stakeholders, not just the
incumbents with the most to lose.
The proposed rule change announced
by the AEMC in July to allow direct access
to wholesale demand response by large
energy users includes a third type of
demand response, where “third parties
can be allowed to bid demand reductions
into the wholesale market as a substitute
for generation”.
The fond and fervent hope when the NEM
was created was that demand side
participation would ensue. The promise
remains unfulfilled for many reasons. The
question is: will the AEMC rule change
unlock value for big business? If businesses
are able to access or develop skills in
managing their energy usage, I believe it
will. Due to the low-cost energy regime we
have enjoyed historically, however, these
skills are in short supply in all but the
largest energy users.
Large aggregators like EnelX have
captured a good share of the DR market,
with 200-plus local clients and 390MW of
what they term “flexibility” under
management. Aggregators offer their clients
a low-pain way of extracting value from
their energy usage and backup generation
assets. But businesses generally have a fairly
defeatist view about power bills. They feel
there is little they can do about costs. Basics
such as tariffs and demand charges are not
always well understood. If a business can’t
get the basics of billing right, what hope
has it of managing its demand without
specialist help?
Only when a business has sought
specialist advice can it look at how DR can
help. At that point, some questions will
spring to mind: will DR help balance supply
and demand? can it save our bacon this
summer? can it help flatten the duck curve?
DR is not a silver bullet but it has a crucial
part to play in the distributed energy grid
we are hurtling toward. This transition,
coupled with the availability of new energy
technologies, provides an option to take the
power back (pun intended).
Yes, DR can help balance supply and
demand, save our bacon this summer and
flatten the duck curve, but not by itself.
Managing the supply-demand balance
requires visibility of all grid-connected
assets — however, nearly 8GW of rooftop
solar is essentially invisible to the local
network and grid operator. To put that in
context, according to AEMO the NEM had
strategic reserves of demand and generation
resources of more than 1GW in 2017-18.
Making this resource visible would be a
great start (and much work has been done in
the Open Energy Network activities), and
making it dispatchable would be an
excellent next step. Storage, of course, is
the solution to manage intermittency of
solar and wind.
How will we see the grid and manage it?
An avalanche of IoT-based technologies are
powering democratised business models.
The other development, noted by the
AEMC, is that generation can be built much
more quickly (less than two years for solar
and wind) than the transmission required
to deliver it (more than six years). We seem
to be about to supercharge the deployment
of distributed energy, with solar and
storage increasingly common to unlock
value for business and the grid.
I believe the future is micro, nano and
perhaps even pico-grids orchestrated to
solve the supply-demand problem at a local
level. Aggregated up, this population of
assets could provide a stable, reliable and
affordable energy supply where value is
shared by all who contribute. Sounds a bit
socialist – but in a good way.
We are heading toward a third type of
demand response, if the AEMC’s rule is
accepted, and services provided should be
valued, but from all market participants, in
the broadest sense. Large licks of
“undemand” from the big end of town will
ease tension on the grid, but getting hold of
lots of existing “invisible” distributed
generators would be a valid option as well.
As always, there are lots of options. We
just have to take our power back.
www.ecogeneration.com.au ecogeneration December 2019 / 21