ESB Chair Says Demand Response Could Kill Need For New Power Plants

“I am completely amazed at the low level of demand management,” Schott told a public forum on energy sector strategic priorities, hosted by the Australian Energy Market Commission on Tuesday.

“It absolutely stuns me. It’s low-hanging fruit waiting to be plucked, particularly now we have technology that will really help.”

Schott said the ESB – which includes representatives from the Australian Energy Regulator, the Australian Energy Market Operator, the AEMC and two independents – has an immediate focus on the summer ahead, and the potential supply issues faced by South Australia and Victoria, as outlined in AEMO report last week.

Another focus, she said, was on 2022, and any issues NSW might face when the Liddell coal-fired power plant was retired by its owner, AGL Energy.

But as the former head of Sydney Water, Schott compares the current squeeze facing Australia’s electricity sector to the water shortages experienced around the country in the late 1990s and early to mid 2000s, and says there’s plenty we could be doing, right now, and for little cost, to address a large part of our energy security concerns.

“I have a background in the water industry and I was shocked to find how little has been done on demand participation in electricity,” Schott told ABC Radio’s The World Today program on Thursday.

“In water, those people will remember having dual flush toilets put into their homes, and aerated water taps, and recycled water plants have been put in everywhere. That saved water demand between 10 and 15 per cent. It’s quite possible to save that much electricity,” she said.

“Overseas those demand responses have saved around 20 per cent, and if we can save that much, we can all stop worrying about building new plants of any description.”

As well as being an effective grid management strategy, and relatively easy to implement, Schott says it’s also cheap.

“If the cost of demand management is less than the cost of providing power, then why aren’t we doing it?” she said at the Tuesday forum.

Certainly, it is one of the mechanisms that AEMO chief Audrey Zibelman is keen to implement – as a grid-wide no-brainer solution for better management of resources, and as a way to mitigate the removal of coal-fired power capacity, like the Liddell closure.

“We need flexible capacity that can be switched on and off,” Zibelman told the same AEMC forum on Tuesday.

“Our advice was fairly pragmatic,” Zibelman said. “We are concerned that on a 45°C day if we lose a generator (which AEMO has said is quite likely) we want reserves in the system to be able to respond.

“In our report we identified the fact that with amount of variability (from solar and wind energy and electricity usage) is changing rapidly, we need resources that can change rapidly.”

Zibelman also noted that the subject of demand management had been communicated badly and misunderstood by the public – particularly the idea that the market operator would turn off the lights or the air-conditioning.

Zibelman said it was clear that the Australian market was heading towards 30-40 per cent “distributed generation”, which meant mostly solar and storage behind the meter. These technologies can and needed to be harnessed to ensure that they contribute to grid security, she said.