Demand response trial expands to NSW

The Australian Renewable Energy Agency (ARENA) and the NSW Government today announced $15 million in funding to pilot demand response in New South Wales this summer.

The NSW Government has committed $7.5 million in funding to be matched by ARENA, bringing the total ARENA funding for its demand response competitive round to $30 million.

This will expand the demand response pilot program to be rolled out this summer to a total of $37.5 million in funding over three years.

NSW Minister for Energy Don Harwin said the pilot showed that energy security is a key priority.

“We need national market reform through the Finkel Review to secure a clean, affordable and reliable energy future,” he said.

“Part of that is reforming the market so we have smarter ways to ensure security, and this pilot will help accelerate the case for national reform.

“This is a tangible way for NSW to deliver greater security in the lead up to summer, and we welcome the partnership with ARENA and Australian Energy Market Operator (AEMO) in our shared vision for a smarter future energy market.”

This competitive funding round is a joint initiative with ARENA and AEMO that will reduce demand on extreme hot days or during emergencies, to avoid unplanned outages.

This $15 million funding pool will be reserved for NSW projects, with the aim to generate 60­70 megawatts of demand response capacity to be available during extreme peak demand days and emergencies.

ARENA has previously committed up to $22.5 million over three years in grants to trial demand response technologies and implementation models in the National Electricity Market, with a focus on South Australia and Victoria.

The original $22.5 million will be allocated to projects outside of NSW, with the aim to provide approximately 100MW of demand response in the rest of the NEM.

In May, the NSW Energy Security Taskforce identified that extreme weather can create spikes in demand which can result in energy supply falling short.

ARENA Chief Executive Officer Ivor Frischknecht said the matched funding from NSW allowed the pilot program to be expanded.

“With the support of the NSW Government, we are able to scale up the pilot program by more than 50 per cent which we expect will offer more than 160 megawatts of innovative demand response across the National Electricity Market – of which more than a third will be available for NSW,” Mr Frischknecht said.

“And this is just the beginning. This pilot program will provide proof of concept for how innovative and flexible demand side resources can help provide security and reliability as we transition to an electricity system powered by more variable renewables.

“A well­designed demand response program will provide a contingency in case of emergencies without relying on fossil fuels.

“We expect electricity use to increase when renewable energy is plentiful and decrease when it is in short supply.

“This will make better use of our existing electricity infrastructure and help reduce energy costs for businesses and households.”

The funding round will close on July 17.