Breakthrough step towards a smart energy system 19 May 2017

Energy experts have applauded the announcement of a $22.5 million pilot program that will improve energy system stability by paying customers to voluntarily reduce their electricity consumption during periods of peak demand.

The pilot program, which will focus on South Australia and Victoria, is a joint initiative of the Australian Energy Market Operator (AEMO) and the Australian Renewable Energy Agency (ARENA). They aim to secure 100 megawatts of demand response capacity by next summer, which will improve system reliability in the event of extreme weather events or unplanned outages.

“This is a breakthrough moment,” said Luke Menzel, CEO of the Energy Efficiency Council, the peak body for energy efficiency and demand response experts.

"The fundamentals of demand response are simple – working with consumers to voluntarily move their energy use from periods of high demand (or low supply), to times when supply is plentiful."

"Where demand response gets exciting is when you can do it quickly, and at a scale. The technology now exists for sophisticated and substantial demand response, enabled by aggregators that combine many different sites together into ‘portfolios’ that provide flexible, secure and stable demand response."

"This approach is common in energy markets around the world, but has long been underutilised in Australia's National Energy Market (NEM), because the right structures and incentives for aggregators to do this work haven't been put in place."

"While the focus of this pilot is improving system reliability in extreme circumstances, its a step towards broader utilisation of demand response to lower costs across the electricity system by helping to meet critical peak demand, increasing competition during periods of tight demand-supply balance, and facilitating higher penetration of renewables into the grid."

"Demand response experts look forward to working with AEMO and ARENA on the successful rollout of this program," concluded Luke Menzel.

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