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Can Demand Flexibility Help Fix the Duck Down Under?


Matt Golden, CEO of OpenEE, was honored to spend a week in Australia, first as Keynote for the National Energy Efficiency Conference, and then in a series of meetings with key stakeholders from the government of New South Wales and Victoria, as well as the Australian Energy Market Operator (AEMO), and the Australian Renewable Energy Agency (ARENA). 

It turns out there are many similarities between the Australian market and California as we move rapidly towards greater penetration of renewables and distributed energy resources. 

As the country with the highest per capita penetration of solar in the world, Australia is no stranger to the challenges of intermittent renewable energy. As Violette Mouchaileh, Group Manager of Market Enhancement at the Australian Energy Management Operator (AEMO) explained at the "Energy Markets and Energy Management" roundtable, Australians are installing 6.5 solar panels every minute.

At the Australian National Energy Efficiency Conference, Matt Golden, CEO of OpenEE, and Violette Mouchaileh shared a panel and gave presentations that brought these similarities into focus. Like California, Australia is locked in a battle with the duck curve. As solar energy becomes an increasingly larger percentage of the power mix, mid-afternoon is turning into a demand valley (when the sun is up), and the late afternoon ramp is increasing.

In both markets, energy efficiency and electrification are critical to providing sufficient, low-cost balancing resources, but current programs (or schemes as they are referred to in Australia) have yet to be integrated into energy markets. California and Australia have historically approached energy efficiency in a similar way, based on deemed (average) measure level savings (think rebates for a product, like a high-efficiency furnace, or LED bulb), or through complex “custom” engineering. Australia, like California, has seen massive innovation in terms of business models and new technologies to manage demand, but these promising advances too often struggle to access current programs, which are designed for specific measures.  

In both places, the way efficiency is valued will need to change from interventions that target average reductions in consumption (monthly savings) to those that can target load shifting to times and locations where the impact is greatest, where we can replace dirty fossil fuel generation with a low carbon and low cost (when the sun is up) power mix.

In both markets, there is a massive and growing demand for distributed balancing resources that is greater than any single source can provide. Storage, dispatchable DR, and EVs are a major part of the solution, but in order to fill the gap (and keep the cost to customers down) demand must also be reshaped. Fortunately, large parts of Australia, such as the State of Victoria, have full smart meter deployment, which will make this transition easier.

AEMO, which operates the Australian National Electricity Market and the Wholesale Electricity Market under the leadership of Audrey Zibelman (formerly a driving force behind the NY REV process), has been focused on the integration of distributed resources such as storage, demand response, and electrification, but is now actively exploring how permanent load shaping through energy efficiency can be included in these emerging markets.

According to Mouchaileh, the key to addressing the duck curve in Australia involves deploying a more diverse set of distributed energy resources, including wind power, advanced storage, and demand response. However, permanent load shaping through energy efficiency has, to date, not fit into their energy market paradigm.

Time and locational energy efficiency represent vast additional resource through flexible demand in existing buildings in Australia, and there is substantial interest in how it can be another key strategy to enable clean energy and a balanced, stable grid.

The Power of Time and Locational Demand Flexibility

Discussions were centered on how Australia could leverage meter-based approaches to calculating changes in energy consumption in order to transform energy efficiency into a tool for long-term, time and locational demand flexibility -- and how to apply these concepts to the Australian market context, which differs substantially from the mostly vertical market in California.

It is clear that we are all struggling with a very similar set of barriers and opportunities, which creates a powerful potential for collaboration and the sharing of best practices (and what to avoid).

In Matt’s many discussions, a number of familiar themes emerged.

  • What is the best way to transition from deemed and custom energy efficiency programs/schemes into pay-for-performance approaches that encourage market innovation and private capital to drive scale?
  • How can we move from monthly energy efficiency to hourly and locational flexibility to ensure that distributed energy markets value the vast potential resource that comes from shifting demand?
  • Can open-source and automated forms of M&V create transparency and enable more real-time feedback loops on the impacts to support both current schemes and the coming move to pay-for-performance and time and locational markets?

Addressing these challenges is at the core OpenEE's policy and business vision and we are excited to have found so many like-minded people and organizations in Australia.

Matt Golden's picture

Thank Matt for the Post!

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Bob Meinetz's picture
Bob Meinetz on January 3, 2019

Matt, "demand flexibility", also known as "making convenient access to electricity an extravagance for those of lesser means", somehow recognizes a solution in assigning the responsiblity for enough electricity to customers instead of the monopoly which generates it. No doubt it would work; whether it's in the best interests of society to drive the wedge deeper between rich and poor is doubtful.

Likewise, "energy efficiency" was never a problem here in California before intermittent solar and wind began disrupting our electrical grid. Is the answer customer efficiency incentives, demand/response, storage, distributed energy resources; more wire, lower voltages, more connections, more resistance losses, etc.? Of course not. The most efficient answer, the one with the greatest economies of scale, is using as few generating resources as possible - while shunting electricity where it's needed with the extroardinary power of telemetry, mass computing, and ISO station power programs.

What we're experiencing now is a crisis of complexity, of believing the best solution is the most recent and the most convoluted. Ask an engineer: unnecessarily-complex solutions to engineering problems have never been the optimal ones, and never will be.

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