Enel X Australia has been awarded a contract to supply 120MW of flexible demand capacity to the Western Australian Wholesale Energy Market.
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The contract signals the return of demand response or ‘demand side management’ in WA, in which participating commercial and industrial customers agree to curtail their electricity use during peak demand periods. This increases the security and reliability of the grid in peak demand periods and provides a revenue stream for participating businesses able to provide capacity through ‘flexible demand’.
Enel X is recruiting commercial and industrial customers to participate in the program via its VPP, which aggregates their energy savings to provide a source of extra capacity to the grid when needed. Curtailing demand for short periods is an alternative to switching on a generator. Customers commit to curtail consumption of a set amount of electricity when called upon. This may only be required a few times each year to keep the lights on in emergencies.
AEMO’s 2023 Wholesale Electricity Market Electricity Statement of Opportunities (ESOO) calls for urgent development of new generation, storage, demand side management, and transmission projects to bolster reliability and support a rapid and orderly energy transition to a cleaner and more sustainable energy future.
The ESOO states that around 1.3GW of coal-fired generation capacity will be retired in WA by year 2030-20311, which is equivalent to around 27% of the current market capacity. This drop in supply, and an increase in demand over this timeframe, has led to a forecast capacity gap of 4GW by year 2032-2033—equivalent to around 83% of the current capacity serving the wholesale electricity market in south-west WA. Demand response will help provide some of that urgently needed capacity, by curtailing demand from large energy users for short periods.
Western Australian Energy Minister Bill Johnston said, “It’s great that Enel X will be able to provide much-needed capacity to our electricity grid through Demand Response via their Virtual Power Plant. This is a good opportunity for businesses to support grid reliability as we undergo the transition to new, lower-emission sources of supply and manage the phase out of State-owned coal-fired plants.
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“Western Australia’s main electricity grid, the South West Interconnected System, needs new forms of power capacity to keep the energy system stable and to keep the lights on during critical times. Demand Side Management is an essential part of all modern energy systems; it is a good time for the SWIS to take advantage of this important initiative.”