ARENA
D EMAN D R E S P O N S E CO M P E TITIVE R O U N D
SU M MARY D O CU M EN T
JUNE 2017
Introduction
The Australian Renewable Energy Agency
(ARENA), working closely with the Australian
Energy Market Operator (AEMO), has
developed a competitive funding round
to drive innovation in demand response.
Flexible and responsive demand side
resources will be important in managing
our energy system as it is powered by
increasing levels of variable renewable
energy like wind and solar PV.
The projects funded through the competitive
round will build the sector’s understanding
of demand response performance
characteristics, help to commercialise new
demand response technologies and business
models, and in the longer term will inform
the development of new markets, or other
incentives, for demand side participation in
the National Electricity Market (NEM).
OV E RV I EW
What is demand response?
How will the program work?
Demand response is defined as a change
in electricity usage by energy customers
from their normal consumption pattern in
response to incentives designed to drive lower
electricity use at times of high prices or when
system security or reliability is jeopardized.
ARENA will provide grant funding to help
a range of energy users to become demand
response-enabled. Those projects will then
be registered as providers under AEMO’s
Short Notice Reliability & Emergency Reserve
Trader (RERT) mechanism. The RERT is one
of the tools available to AEMO to help it
maintain a secure and reliable power system
by negotiating contracts for reserve capacity
which they can call on during critical peaks
or emergency situations. While ARENA will
pay the technology and set up costs
of enablement, compensation for dispatch
(the reserve capacity being used) will be
paid by AEMO under the RERT.
During a grid emergency or extreme weather
days, demand for electricity may spike putting
strain on the electricity system. Under this
three-year pilot program, ARENA and AEMO
will look to provide support for demand
response projects that reduce electricity use
in response to grid emergencies or extreme
peak demand days.
During these situations, the electricity system
has low operating reserves, meaning there is
not enough reserve capacity to cover events
such as generators failing.
By reducing electricity consumption or making
stored supply available, demand response can
free up supply when needed to ease the strain
on the system, therefore avoiding involuntary
load shedding.
What sort of projects do we expect?
ARENA and AEMO aim to demonstrate
approximately 100 megawatts of demand
response capacity can be trialled in an
operational context to support system
reliability in the upcoming summers.
This program will aim to demonstrate that
demand response can be an efficient and
low cost mechanism to support higher
penetration of variable renewable energy
in the electricity grid without compromising
grid security and stability.
ARENA will seek to demonstrate a range
of different demand response approaches
including delivery by demand response
aggregators, retailers, networks and directly
by large energy customers. We aim to
create a portfolio of projects using different
technologies including industrial processes,
batteries, distributed generation, controllable
loads like pumps, heating and ventilation and
smart appliances like air conditioners and
pool pumps.
How can I get involved?
Go to ARENA’s website arena.gov.au
where you can find further information
including the formal funding announcement
and ARENA’s funding agreement.
If you have questions, please direct them to:
[email protected]
Demand response will
help free up electricity
supply when needed to
ease the strain on the
electricity system.
2
ARENA Demand Res p o nse Co m p et it ive Ro und
ARENA D emand Response Competitive Round
3
F UN DI N G M EC H AN I S M
ARENA Demand Response Projects
Short Notice RERT Panel
BID A
Dispatched at AEMOs request
3 YEAR
CONTRACT
Technology enablement cost
BID B
Usage charge ($/MW/year)
BID A
$/MW
BID B
Aggregator 1
Technology
enablement cost
Grant from
ARENA
Usage charge
($/MWh)
Funded via
SN RERT
Technology enablement cost
Usage charge ($/MWh)
BID C
BID C
BID A
Aggregator 2
BID C
Technology
enablement cost
Grant from
ARENA
Usage charge
($/MWh)
Funded via
SN RERT
Technology enablement cost
Usage charge ($/MWh)
Projects selected
based on ARENA
merit criteria
Long Notice RERT Panel
Dispatched at AEMOs request
1 YEAR
CONTRACT
BID B
Other RERT
offers
Bespoke contract
and negotiated
payment
arrangement
Funded via
LN RERT
Other LN
RERT offers
4
ARENA Demand Res p o nse Co m p et it ive Ro und
ARENA D emand Response Competitive Round
5
Key Dates:
Funding round opens
8 June 2017
Register intent to apply for funding
Submit comments on draft funding agreement
16 June 2017
Final funding agreement released
23 June 2017
Funding round closes
10 July 2017
Submissions reviewed
July–August 2017
Funding agreement signed
September 2017
Set up and testing
October–November 2017
Demand response projects commence
December 2017
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