Emergency Demand Response – earn revenue and avoid costly charges this summer

According to AER, since Q2 the year, three major generators have been offline for prolonged periods due to flooding, weather impacts on fuel supply and asset failure. This has resulted in increased wholesale price volatility affecting energy users across the market.¹

For business energy users in the NEM, a possible future supply shortfall has the potential to drive higher wholesale prices and additional charges on energy bills, and increase the risk of power outages.

To help mitigate these charges, earn additional revenue and be forewarned of disruptive power outages, eligible businesses can participate in an Emergency Demand Response program.

What is Emergency Demand Response?

Demand Response (DR) programs involve large energy users reducing their energy demand when requested in order to help maintain grid reliability. Businesses receive performance-based payments for their participation. DR events are activated when there is significant pressure on the electricity system due to very high demand or supply constraints.

Emergency Demand Response is provided through the Australian Energy Market Operator’s (AEMO’s) Reliability and Energy Reserve Trader (RERT) function. These emergency events typically occur during Australian summers, when extreme weather events can have a severe effect on supply and demand.. Emergency Demand Response is used to combat the threat of blackouts during these peak demand periods.

How does Emergency Demand Response work?

To avoid power outages in the grid, RERT participants receive a request (usually about 2 hours before an event) to lower or shift their energy use. This request comes via RERT providers on behalf of AEMO.

To participate, the business may do one or more of the following to reduce demand on the network:

• • Switch off energy-intensive equipment
  • Change equipment operating hours
  • Switch to gas or on-site generators
  • Use battery storage

Forecasts are often received up to 5 days before an emergency event, giving participants advance notice. Businesses can then make a decision and inform their RERT provider whether or not they wish to participate.

What are the benefits of Emergency Demand Response?

There are four main ways participants benefit from Emergency Demand Response:

• • Earning additional revenue – participating businesses are compensated for their participation and the volume of electricity they reduce during the agreed period.
  • Mitigating costly charges – all large energy users are charged the cost of emergency events on their electricity bills. By participating in the scheme, businesses can reduce some of these charges.
  • Reducing exposure to price volatility – by reducing your business’s energy load during emergency events, you may also reduce your exposure to the higher wholesale prices that typically accompany these events.
  • Being notified of an impending blackout – in most cases, participants receive advance warning of emergency events and grid power outages, giving them crucial time to plan for a shut down of equipment or to use on-site generators during the event.

Is Emergency Demand Response right for my business?

There’s a few things to consider when weighing up your participation in Emergency Demand Response.

1. 1. Eligibility – each RERT provider will have different eligibility criteria, such as an annual energy consumption threshold. To be eligible for Shell Energy’s program, for example, your business must consume more than 10 gigawatt hours (GWh) of electricity per year.
   2. Ability to respond – unlike other DR programs, requests will be infrequent (typically less than six requests a year), and your business would typically have two hours to respond to a request. Most large energy users are able to meet this timeframe, subject to other operational constraints.
   3. Consumption patterns – Emergency Demand Response is best suited to businesses that operate 24 hours per day, 5 or 7 days a week with a flat energy load.

An energy expert is the right place to start if you’re unsure whether Emergency Demand Response is right for your business, or you want to discover how your business can better respond to DR opportunities.

What are the other types of Demand Response?

In Australia, there are three main types of Demand Response, in addition to Emergency Demand Response. These are:

• • Wholesale Demand Response requires users to reduce energy demand to help relieve pressure on wholesale electricity prices.
  • Ancillary Services Demand Response or Frequency Control Ancillary Services (FCAS) are used to maintain the grid’s required frequency range of close to 50 hertz so the power system can avoid potential blackouts or load shedding. This calls on participants to quickly inject energy into the grid or reduce demand.
  • Network Demand Response is used to alleviate the strain on the network, such as when power lines are nearing capacity. These opportunities vary by State.

Suitability and benefits of each program depends on a business’s energy load and patterns, equipment and system automation, and response capabilities.

Get in touch with Shell Energy today on 13 23 76 to discuss Demand Response, and how we can help you maximise the value of your participation.

Our Emergency Demand Response offering is available to Shell Energy and non-Shell Energy retail customers. For further information on the energy solutions and products we can help your business with, get in touch with us today.

¹ https://www.aer.gov.au/news-release/unplanned-outages-impact-a-solid-year-of-low-wholesale-energy-prices