More Related Content
Similar to Wrestling Marshmallows - TransGrid's 2014 Demand Management Innovation Forum (20)
Wrestling Marshmallows - TransGrid's 2014 Demand Management Innovation Forum
- 1. TransGrid’s 2014 Demand Management Innovation Forum Wrestling Marshmallows: how to build a demand management market? Chris Dunstan, ISF 24 September 2014 1 | The role of networks in a changing market dynamic September 2014
- 2. Introduction TransGrid’s 2014 Demand Management Innovation Forum was held on 24 September in Sydney. This is an annual event that TransGrid hold to discuss demand management activities both in our network and across the NEM. More than 60 people joined the conversation, ranging from large energy users, consumer advocates, researchers, technology providers and other networks. 2 | TransGrid’s 2014 Demand Management Innovation Forum 24 September 2014
- 3. Overview 1. State of Play: Not Business as Usual 2. Barriers to DM 3. Building the DM market (Targets, Reporting, Incentives and Customer Engagement) 4. Crossing the streams?
- 4. What is Demand Management (DM)? Reducing or shifting demand, as an alternative to providing more supply capacity to meet demand Peak Load Management Ice Storage Battery Storage / EVs Power factor correction Energy Efficiency Distributed Generation Interruptible loads Cogeneration Efficient motors & chillers Efficient Lighting Efficient showerheads Efficiency Retrofits Gas Chillers Electric to Gas Hot Water Standby Generation Time of Use pricing Biomass Generation Small Gas Generation Solar Photovoltaics Behaviour change
- 5. State of Play Not business as usual
- 6. “Another Kodak moment?” 1. What business are you in? 2. What business do you want to be in? 3. What business are you expected to be in? Source Technology Review: http://philebersole.wordpress.com/2012/01/21/kodak-and-the-rochester-mentality/
- 7. Don’t cross the streams? The old paradigm > Centralised supply > Forecast demand > Build infrastructure > Maximise revenue from growing MWh > Minimal DM > Little engagement with customers (end users) The new paradigm > Decentralised supply > Manage demand > Invest in least cost supply and demand side mix > Grow revenue & returns by customer value adding > Maximise cost effective DM > Extensive engagement with customers (and retailers and service providers)
- 8. The DM Opportunity $16b $14b $12b $10b $8b $6b $4b $2b $0b Total benefit of demand reduction in the NEM 2013/14 to 2022/23 Lower Upper NPV of absolute benefits Demand reduction case Efficient pricing Demand response Energy efficiency $4.35b $11.7b Source Data : AEMC Power of Choice Review Final Report, 2012
- 9. Demand Management Innovation Allowance: allocation and expenditure 12% 14% 15% 44% 1% 20% 0% 12% 70% 1% 100% 80% 60% 40% 20% 7% 4% 0% $6m $5m $4m $3m $2m $1m $0m ActewAGL Ausgrid Endeavour Essential Energex Ergon SA Power CitiPower Jemena Powercor SPAusNet United Aurora ACT NSW QLD SA VIC TAS 2009-14 2010-15 2011-15 2012-16 DMIA spent to 2011/12 DMIA allocated over 5yr period Proportion of DMIA spent Source: AEMC Power of Choice Review Final Report, 2012
- 10. Status of Network DM US average Aust average Source ISF, Restoring Power: Cutting Bills & Carbon Emissions with Demand Management http://www.aemc.gov.au/getattachment/fa79d4d7-ff1d-4632-b818-45c99bb23ca3/Rule-change-request-supporting-report.aspx
- 11. Source: 2014 National Electricity Forecasting Report (NEFR) (June 2016)
- 12. Source: 2014 National Electricity Forecasting Report (NEFR) (June 2016)
- 13. Source: 2014 National Electricity Forecasting Report (NEFR) (June 2016)
- 14. Components of electricity price rises in NSW 2007/08 - 2012/13 14 Source: IPART, Review of regulated retail prices and charges for electricity 2013 to 2016, (2012)
- 15. Wild Card 1: Solar PV Source: APVI http://pv-map.apvi.org.au/analyses
- 16. Wild Card 2: Climate policy “Climate change is a defining issue of our age, of our present. Our response will define our future. … The human, environmental and financial cost of climate change is fast becoming unbearable. We have never faced such a challenge, nor such an opportunity. … We must cut emissions. Science says they must peak by 2020 and decline sharply thereafter. By the end of this http://cambia.pe/?p=6240 century we must be carbon neutral.” Ban Ki-moon, Secretary-General, United Nations, 23 Sept 2014 http://www.theguardian.com/environment/blog/live/2014/sep/23/un-climate-change-summit-in-new-york-live-coverage#block-54216343e4b020a19dddfbfe
- 17. Wild Card 3: Energy Efficiency the cheapest way to cut carbon emissions Source: International Energy Agency, World Energy Outlook 2011, Fig 6.4
- 18. Wild Card 4: Electric Vehicles The Mitsubishi i-MiEV (16kWh of batteries + 54 kW electric generator) Q. How many Volts = Australia’s total peak electricity demand? A. ~800,000 (= 6% of the fleet) (16kWh of batteries + 150 km range) (Chevy) Holden Volt
- 19. Wild cards interactions? e.g. EV + PVs Cost of Solar PV: 2009-2020 (Chevy) Holden Volt Solar is already at “socket parity” cost in much of Australia What happens when you combine: (16kWh of batteries + 54 kW electric generator) cheap solar energy with... “free” battery storage and abundant local generation?
- 20. Will “grid defection” impact be bigger for those who stay?
- 21. Wild Card 5: Empowering consumers (& 3rd parties) with data
- 22. Google Nest
- 23. How should network businesses respond? (possible options) 1. “Defensive” pricing (e.g. raise fixed access charges) 2. Cost reflective pricing (e.g. capacity charges & dynamic peak pricing) • Needs interval/smart meters and customer acceptance 3. Demand management incentives (e.g. support customers to lower their bills) • Needs policy reform to address disincentives.
- 24. Barriers to DM
- 25. Survey of Perceived Barriers to DM (2011) • Do stakeholders agree these barriers are real? • Which barriers most important? • Do different stakeholder groups see barriers differently? – 800 stakeholders; – 200 replies www.a2se.org.au/images/stories/files/a2se_isf_dm %20barriers%20report%20june%202011.pdf
- 26. Survey Respondents Category Respondents # Respondents Utilities Energy Utility – Network Energy Utility – Retailer Energy Utility – Generator 29 5 1 Government Government Agency – Federal Government Agency – State Government Agency – Local 2 20 8 End User Energy Consumer – Commercial Energy Consumer – Industrial 12 2 DM Provider Demand Management Provider Demand Management Consultancy Energy Supply Consultancy 8 17 14 Other Environmental organisation Consumer organisation Industry organisation Regulator Research Institution Other 16 8 3 2 26 28 *
- 28. Stakeholder Type: Level of Agreement Top 10 Barriers to DE
- 29. How do we build a Demand Management market that maximises benefits to customers, while protecting network businesses (and facilitating carbon emission reduction)?
- 30. Elements of an effective DM incentive scheme *AER addressing this *AER addressing this *small *AER addressing this Source ISF, Restoring Power: Cutting Bills & Carbon Emissions with Demand Management http://www.aemc.gov.au/getattachment/fa79d4d7-ff1d-4632-b818-45c99bb23ca3/Rule-change-request-supporting-report.aspx
- 31. 6 KEY ACTIONS FOR NETWORK DM 1. AEMC to change National Electricity Rules to remove actual and perceived barriers to DM. 2. AER to establish an effective DM Incentive Scheme (DMIS) to drive DM wherever it will reduce costs to consumers. 3. Set collaborative DM targets with distribution network businesses. 4. Ensure transparent DM reporting by network businesses. 5. Provide effective DM performance incentives to network businesses. 6. Intensive customer engagement (incl. via intermediaries) via pricing, incentives, facilitation and information • Ring-fencing barriers?
- 32. Precedent #1: Californian DSM Incentive Scheme • Incentive/Penalty Mechanism – Utility ratepayers and shareholders “share the savings” from EE programs. • Financial rewards balanced by penalties for poor performance, tied to Commission-adopted kW, kWh and therm savings goals. Source: Dian Grueneich, California Public Utilities Commission, 2007
- 33. Precedent #2: Queensland Energy Conservation & Demand Management Program > In 2009/10, Qld Govt allocated $47 million for demonstration projects > In 2010, Energex and Ergon sought and were allocated ~$220 million for Demand Management programs from the Australian Energy Regulator > Energex and Ergon now have extensive plans, teams, budgets and targets in place to reduce demand growth and support DE. 33
- 34. © Institute for Sustainable Futures, UTS 34 http://www.energex.com.au/network/network_prices/pdf/Energy%20Conservation%20&%20Demand%20Management.pdf
- 35. Informing the market: Network Opportunity Maps Dynamic Avoidable Network Cost Evaluation (DANCE) Model http://cfsites1.uts.edu.au/isf/news-events/newsarchive-detail.cfm?ItemId=31169
- 36. Dynamic Avoidable Network Cost Evaluation (DANCE) Model http://cfsites1.uts.edu.au/isf/news-events/newsarchive-detail.cfm?ItemId=31169
- 37. Dynamic Avoidable Network Cost Evaluation (DANCE) Model http://cfsites1.uts.edu.au/isf/news-events/newsarchive-detail.cfm?ItemId=31169
- 38. 2010 Dynamic Avoidable Network Cost Evaluation (DANCE) Model http://cfsites1.uts.edu.au/isf/news-events/newsarchive-detail.cfm?ItemId=31169
- 39. 2011 Dynamic Avoidable Network Cost Evaluation (DANCE) Model http://cfsites1.uts.edu.au/isf/news-events/newsarchive-detail.cfm?ItemId=31169
- 40. 2012 Dynamic Avoidable Network Cost Evaluation (DANCE) Model http://cfsites1.uts.edu.au/isf/news-events/newsarchive-detail.cfm?ItemId=31169
- 41. 2013 Dynamic Avoidable Network Cost Evaluation (DANCE) Model http://cfsites1.uts.edu.au/isf/news-events/newsarchive-detail.cfm?ItemId=31169
- 42. 2014 Dynamic Avoidable Network Cost Evaluation (DANCE) Model http://cfsites1.uts.edu.au/isf/news-events/newsarchive-detail.cfm?ItemId=31169
- 43. 2015
- 44. Summer Peak Day- 9am Dynamic Avoidable Network Cost Evaluation (DANCE) Model http://cfsites1.uts.edu.au/isf/news-events/newsarchive-detail.cfm?ItemId=31169
- 45. Summer Peak Day- 1pm Dynamic Avoidable Network Cost Evaluation (DANCE) Model http://cfsites1.uts.edu.au/isf/news-events/newsarchive-detail.cfm?ItemId=31169
- 46. Summer Peak Day- 4pm Dynamic Avoidable Network Cost Evaluation (DANCE) Model http://cfsites1.uts.edu.au/isf/news-events/newsarchive-detail.cfm?ItemId=31169
- 47. Price reform (and metering). -incl. AEMC Distribution Network Pricing Arrangements draft rule change. Actively engage with customers to cut their bills via DM. (Demand side engagement strategy) DM planning and budgets in Network Pricing Determination. Seek an effective DMIS from AER. DMIS Rule Change an opportunity to progress network DM. ARENA/ISF network opportunity mapping re DM Just do it! Network DM Next Steps?
- 48. 1. What business are you in? 2. What business do you want to be in? 3. What business are you expected to be in? These are key questions not just for NSPs, but regulators and policy makers too.
- 49. Donald Horne, The Lucky County, 1964 “Australia is a lucky country run mainly by second-rate people who share its luck.” …but also: “The saving Australian characteristic … is the ability to change course quickly, even at the last moment ... This can happen almost without discussion or dramatization of the change… Australians … hate discussion and ‘theory’ but they can step quickly out of the way if events are about to smack them in the face.”
- 50. Or when it comes to wrestling marshmallow, listen to the experts: Cross the streams! http://www.youtube.com/watch?v=9wrEEd1ajz4
- 51. Thank you Chris Dunstan E: [email protected], T: 02 9514 4882
Editor's Notes
- #5: What am I talking about when referring to Decentralised or Distributed Energy? 3 key elements: EE PLM DG or Embedded generation
- #12: 2014 National Electricity Forecasting Report (NEFR) (June 2016)
- #13: http://www.aemo.com.au/Electricity/Planning/Forecasting/National-Electricity-Forecasting-Report
- #16: http://pv-map.apvi.org.au/analyses
- #17: Photo: http://cambia.pe/?p=6240
- #19: Holden Volt Electric range: 87 km
- #23: https://nest.com/thermostat/inside-and-out/#nest-sense $3.2 Billion Jan 2014
- #34: http://www.climatechange.qld.gov.au/pdf/factsheets/1energy-b1.pdf
- #35: http://www.energex.com.au/network/network_prices/pdf/Energy%20Conservation%20&%20Demand%20Management.pdf
- #51: http://www.youtube.com/watch?v=9wrEEd1ajz4