Demand Response kept the lights on in record WA summer

The Western Australia Wholesale Energy Market (WEM) contended with challenging conditions during summer 2023/24, with six days during the season ranked among the 10 highest demand days in its history.

 

The first sign of the unprecedented conditions to come began in November, when temperatures soared above 40C - Perth’s first ever severe heatwave in November. Many heatwaves followed, with three falling close together in February, causing records to tumble across the state. Temperatures were 1.9^oC above the long-term average, making it the warmest summer since observations began in 1910. Perth had nine days of temperatures at or above 40^oC, the second-highest after the summer 2021-22, which had 13 days.¹

 

Anticipating the need for extra energy reserves ahead of the summer period in Western Australia (WA), the Australian Energy Market Operator (AEMO) procured additional reserve capacity that could be called upon in emergencies, through the Supplementary Reserve Capacity (SRC) program.

 

These ‘standby’ reserves included capacity from the Enel X Virtual Power Plant (VPP), which orchestrates the combined energy consumption of participating commercial and industrial (C&I) customers. By reducing demand when called upon by AEMO, the VPP balances supply and demand to help keep the lights on, much like an equivalent sized generator.  

The SRC emergency program ran alongside the Enel X capacity charge management program, which signals C&I customers when to reduce energy consumption on forecasted peak demand days. This reduces future capacity charges, which are calculated based on how much peak demand capacity is used at peak times during the previous summer. 

 

Enel X forecasts that it has accurately predicted the top twelve peak demand intervals used to calculate annual capacity charges, by evolving its advanced forecasting tools and adapting to unprecedented weather conditions and shifts in energy consumption patterns. The accuracy of these forecasts minimised the downtime and operational disruptions for participants, whilst enabling them to maximise savings on their capacity charges. 

 

Both programs incentivised large energy users to help keep the lights on for others in challenging conditions, by curtailing sufficient power for long enough, when needed.  

 

Demand response is significantly cheaper, cleaner and quicker to implement than building new fossil fuel generation. It helps bridge a rapidly growing gap in supply and demand resulting from the planned closure of coal fired generators and rising growth in demand, whilst more renewable generation and storage can be brought online.

 

Demand response will help fill a growing gap between supply and demand in WA over coming years. AEMO is anticipating a ‘capacity’ gap of close to 1GW by 2025, rising to 4GW by 2032 unless additional investments in capacity are made. This is illustrated in the graph below, taken from the AEMO 2023 WEM Electricity Statement of Opportunities². For context, the current size of the wholesale energy market in WA is around 5GW, so a 4GW gap within eight years is a difficult challenge – but one that must be met.

This growing capacity gap, driven by retirement of coal fired generation as we transition to renewables and an increase in demand from population growth, will be compounded by an increase in energy demand from mining, to extract the minerals needed to build new renewable energy infrastructure. This will boost the WA economy and support global efforts to build renewable energy infrastructure.

Demand response will help support the energy grid during the accelerating transition to renewable energy. The mining sector itself, which is shifting to more electrification to decarbonize, can participate in demand response by scheduling ‘flexible’ activities to run when energy supply is high and powering these down when reserves are low. Scheduling energy intensive activities reduces blackout risks, generates revenue for participants and keeps the lights on at home.

Against this background, AEMO has contracted Enel X to provide additional capacity reserves in a new program for the summers of 2024/25 to 2025/26.  This program will provide compelling incentives for commercial and industrial customers to provide standby energy reserves via the Enel X VPP, to increase grid security and reliability in WA.

 

Businesses that are keen to ensure their energy security, support ESG goals and earn new revenue streams are encouraged to get in touch with Enel X to learn more about participating.

References

 

^{1. Kaur, H. (2024a, March 9). After a record-shattering summer of heat across WA, residents look to autumn for relief. ABC News.}

^{2. 2023 Wholesale Electricity Market Electricity Statement of Opportunities, August 2023}