The chair of Australia’s newly formed Energy Security Board, Dr Kerry Schott, has stressed the importance of demand response in meeting the nation’s energy security and affordability needs, telling ABC Radio that if we could harness the technology effectively, we could “all stop worrying about building new plants of any description.”

Schott, who in her role as chair of the ESB is tasked with coordinating the implementation of the Finkel Review recommendations and co-ordinate the three major energy institutions – operator, regulator and rule-maker, and so is set to play a pivotal role.

Some, like the former chief of the Clean Energy Finance Corp, Oliver Yates, want the Coalition government to let her and the others “get on with their job.”

Schott says she is shocked by how little had been done to harness the huge resource that is behind-the-meter solar and battery storage in Australian homes and businesses. Schott (far left) at the AEMC forum on Tuesday, with AEMC’s Clare Savage, AEMO’s Audrey Zibelman, and AER’s Paula Conboy

“It absolutely stuns me. It’s low-hanging fruit waiting to be plucked, particularly now we have technology that will really help.”

Schott said the ESB – which includes representatives from the Australian Energy Regulator, the Australian Energy Market Operator, the AEMC and two independents – has an immediate focus on the summer ahead, and the potential supply issues faced by South Australia and Victoria, as outlined in AEMO report last week.

Another focus, she said, was on 2022, and any issues NSW might face when the Liddell coal-fired power plant was retired by its owner, AGL Energy.

But as the former head of Sydney Water, Schott compares the current squeeze facing Australia’s electricity sector to the water shortages experienced around the country in the late 1990s and early to mid 2000s, and says there’s plenty we could be doing, right now, and for little cost, to address a large part of our energy security concerns.

“I have a background in the water industry and I was shocked to find how little has been done on demand participation in electricity,” Schott told ABC Radio’s The World Today program on Thursday.

“In water, those people will remember having dual flush toilets put into their homes, and aerated water taps, and recycled water plants have been put in everywhere. That saved water demand between 10 and 15 per cent. It’s quite possible to save that much electricity,” she said.

“Overseas those demand responses have saved around 20 per cent, and if we can save that much, we can all stop worrying about building new plants of any description.”

As well as being an effective grid management strategy, and relatively easy to implement, Schott says it’s also cheap.

“If the cost of demand management is less than the cost of providing power, then why aren’t we doing it?” she said at the Tuesday forum.

Certainly, it is one of the mechanisms that AEMO chief Audrey Zibelman is keen to implement – as a grid-wide no-brainer solution for better management of resources, and as a way to mitigate the removal of coal-fired power capacity, like the Liddell closure. “We need flexible capacity that can be switched on and off,” Zibelman told the same AEMC forum on Tuesday.

“Our advice was fairly pragmatic,” Zibelman said. “We are concerned that on a 45°C day if we lose a generator (which AEMO has said is quite likely) we want reserves in the system to be able to respond.

“In our report we identified the fact that with amount of variability (from solar and wind energy and electricity usage) is changing rapidly, we need resources that can change rapidly.”

Zibelman also noted that the subject of demand management had been communicated badly and misunderstood by the public – particularly the idea that the market operator would turn off the lights or the air-conditioning.

Zibelman said it was clear that the Australian market was heading towards 30-40 per cent “distributed generation”, which meant mostly solar and storage behind the meter. These technologies can and needed to be harnessed to ensure that they contribute to grid security, she said.

The program, being run jointly with the Australian Renewable Energy Agency, signals a tangible change in focus for AEMO, and the market in general, in finding smarter ways to manage supply and demand rather than simply building more fossil fuel plants and poles and wires.

AEMO’s new CEO Audrey Zibelman is already a champion of demand response and it was one of the major levers that she pulled when running New York’s Reforming the Energy Vision program that aims for more decentralised power, and 50 per cent renewable energy by 2030.

In the PJM market, one of the biggest in the US, demand response accounts for 10 per cent of total capacity, and Zibelman sees no reason why it cannot grow to be at least 30 per cent of the Australian market.

That’s because Australia has a ready-made investment in the technologies that are needed. More than 1.6 million homes and businesses have installed rooftop solar, and many of these will install battery storage as well.

“If you have solar on your roof and you are putting in storage, it is saying that during certain hours of the day you use solar to charge up the battery, and then, rather than relying on grid, you reduce demand on the grid. For us (the grid operator) that’s the same as increasing generation.”

Zibelman says it is an obvious solution to provide a price signal to use these resources, as well as rewarding others – such as manufacturers and large businesses – for cutting back on their power usage at critical moments, rather than spending more money on new plant.

“If we can reduce the amount of demand, that has the same benefit as the grid, and is a lot less expensive than building a new power plant that is only used for a few hours a year,” she says. Continue reading →