Electricity demand varies throughout the year with peak loads occurring from only very short periods on hot summer weekdays. Meeting peak demand is a costly exercise due to the capital investment required to maintain sufficient capacity to meet growing peak demand for short periods of time.
Demand management is the use of financial incentives, education or other programs to modify the demand for energy. It can be designed to shift the peak load to another time of day, cut the peak load, or reduce the total load by increasing end use efficiency.
Typically demand management encourages the user to reduce the load at peak times or move the time that the load is used to off-peak times, such as night-time or weekends.
The new Wholesale Energy Market is a market that was designed from the outset to accommodate and encourage the specific requirements of demand side management.
A key feature of the wholesale market is called the Reserve Capacity Mechanism. The Reserve Capacity Mechanism:
This approach has been very effective. In the first round of the reserve capacity mechanism, which sought capacity for the 2007/08 capacity year, around 130 MW of demand management was offered, and accepted, into the market. In the second round (2007/08 capacity year), 108 MW was accepted into the market. Demand management accounts for between 2 - 3% of the market and there appears to be substantial opportunity for further demand management to be offered in the future.
Synergy and Water Corporation were both successful in securing capacity credits for demand side management programs as part of the first round reserve capacity process.
Further information on the operation of the wholesale electricity market and the opportunities for demand management is available on the Independent Market Operator’s (IMO) website.
The Electricity Corporations Act (WA) 2005, related legislation and regulations require Synergy to supply electricity in a way that promotes efficiency in electricity supply systems and the management of demand. This requirement reflects the fact that Synergy has a franchise market (those electricity customers consuming less than 5.7kW average demand) and may potentially influence the amount of power consumed and the peakiness of electricity demand through its marketing activities.
Synergy developed and implemented the Peak Demand Saver program for the summer of 2004/05. This program enables some of Synergy’s major customers to be financially compensated for reducing demand upon request (e.g. load shedding and/or use of standby generators).
This program has been very successful and contracted over 70MW of demand response from major customers for the January to March 2005 peak demand period.
After the success of the Peak Demand Saver program in 2004/05, Synergy extended the program for contractual periods of up to 3 years in order to provide additional capacity support for the SWIS.
At this stage, Synergy believes that standby generators located at customer’s premises offer significant potential for additional peak load reductions in electricity demand.
