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Towards a two-sided market … the role for demand response in tomorrow’s grid: expert panel | EcoGeneration

Alex Leemon 34

Demand Response Lead Flow Power

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Oct 14, 2020Oct 14, 2020 10:50 am GMT
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The Energy Security Board’s Post 2025 Market Design Consultation Paper set out a wishlist for reform which was received by the clean energy crowd with a big thumbs up. So far so good. In its section on two-sided markets, the board set down some design initiatives it feels will allow consumers to participate in the wholesale market and reward the value provided by flexible demand and supply. Traders will only participate in dispatch once barriers are removed and incentives put in place, the board wrote in the consultation paper.

Towards a two-sided market … the role for demand response in tomorrow’s grid: expert panel | EcoGeneration

Source: www.ecogeneration.com.au

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Matt Chester on Oct 14, 2020

Thanks for sharing, Alex. I've read up a bit about these debates and developments in Australia and I'm curious if you can shed some light on what makes the situation unique in Australia and if there are market developments that have taken place in other countries that could best serve as a roadmap for what can/should happen there?

Alex Leemon on Oct 15, 2020

Hey Matt,

I think there's a few elements:

- The east coast market (The NEM) is an energy-only design which has strong implications around investment.
- Increasingly high penetration of renewables (South Australia just hit 100% wind coverage of their load, [plus some gas-fired gen for system security and exporting across an interconnector]) with a lot of land for more renewables
- Policy chaos - a federal government who doesn't believe in climate change and has changed the carbon policy multiple times in a short period of time, against the states and local governments which have all set renewable energy targets of various ambitions.

Something that I believe others in the world are looking to Australia is the idea 'minimum demand' - South Australia is approaching the point where 100% of load will be met by rooftop PV installations. This could happen as early as spring or autumn next year.

In general I'd categorise Australia behind other markets in terms of technology uptake, but ahead in terms of DER integration, high renewables and lack of desire to invest in old technologies.

Matt Chester on Oct 15, 2020

Fascinating-- thanks so much for the perspective, Alex!

Bob Meinetz on Oct 14, 2020

"...the board set down some design initiatives it feels will allow consumers to participate in the wholesale market and reward the value provided by flexible demand and supply."

Alex, do you really know any consumer who is anxious to participate in his/her wholesale electricity market? I don't know a single one. Every electricity consumer I know wants reliable electricity that doesn't cost a lot. If it's "green" all the better, but if it costs more most will take the dirty kind.

To them, this "two-sided" market sounds like a scam. It sounds like a way to force consumers to pay more for electricity when they need it most, to being forced to think twice about when the can use their oven or dishwasher. It sounds like big energy companies shifting the burden of providing a reliable "anytime" supply of electricity to their customers.

What would you say to them?

Alex Leemon on Oct 15, 2020

Hey Bob,

The 'two-sided market' is part of a major package of works to help increase the accessibility of the market to distributed energy resources (DERs) - variable pricing signals are considered one of these key elements.

I work for a retailer which offers floating wholesale price plans to customers - so electricity prices are often higher in the morning and evening peaks, with the risk of extremely high volatility in the hot summer months, but overall the net cost is usually lower because th hedging costs and risks are removed. Add in DR and many of our customers see significantly lower electricity costs by actively managing their time of use.

I agree about the convience of 'anytime' supply, but I think there's also a growing number of educated customers out there who are willing to be flexible with their energy usage in order to save money. This is evident in the C&I market in Australia, but is starting to be seen in the residential sector. The rise of low cost IoT devices for the home will only continue to accelerate these trends in Australia.

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