Demand response – an opportunity for end-users to exercise their power of choice in a meaningful way

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Interview with Quintin Tahau, Demand Response Manager, Transpower, New Zealand

Quintin TahauPeak demand is one of the biggest challenges the electricity distribution industry is facing. In countries like Australia, where cold winters and hot summers are the norm, energy providers struggle to balance load with consumers’ demand peaks for just a few days a year. Transpower has become a leader in demand response and your demand response program is making headlines around the region for the high uptake from customers and the terrific results it is achieving. Tell us more about the program…

The uptake from customers is high considering the length of time that we’ve been running our program, but there is still much to achieve. Our current demand response market program has only been in operation since July this year and participation was through an open Request for Proposals (RFP) in April-May. Prior to opening the program for participation we anticipated that we’d get 100 MW of demand response, but we really had no idea what the likely response was going to be.

In the end, we approved 110 MW in our price responsive program and 58 MW in our security program. By the time we signed agreements with all of our participants, we had closer to 130 MW across both programs. We were pretty happy with that result; however, the most pleasing aspect of the RFP was the reduction in prices for demand response when compared with previous initiatives.

How did you get your commercial/industrial customers involved?
Getting end consumers involved in demand response requires spending a lot of time educating people about how demand response works – who is involved, why we need it and how much it’s worth to them. We’ve also spent the past year trying to understand what it takes for different business types to get involved, understanding where the barriers are, and how to make it easier. While the response we’ve seen through our program is encouraging, we still have a lot of work to do if we want to grow beyond the early adopters.

One of the main things we focused on to encourage customers was removing barriers for participation. This is a huge area, covering everything from making the contracting process simple through to providing clear and simple-to-follow user guides for our demand response management system. We found that by making demand response more accessible then more customers are able to get involved. This has resulted in greater competition through higher levels of participation by a more end consumers, either by direct participation or through third party curtailment service providers.

The flow-on benefit for customers is that through participation, they have a better understanding of their business’ energy needs and as such, have a better understanding of how they can use it as an asset in demand response programs like ours. Their success is also seen by their peers, so they effectively act as a nice marketing channel for demand response. This is definitely a win-win situation for everyone and a positive outcome.

What role do you foresee demand response to play in the future?
Demand response will be just a small part of our industry’s future and just one of a myriad of initiatives aimed at doing things smarter. The big thing about demand response that I foresee is that it will prove to be the tipping point for allowing consumers into a supply-driven market. Consumers will have choice – demand response markets will be one of many opportunities for end-users to exercise their power of choice in a meaningful way.  The challenge to the industry is to prepare for the day when consumers realize and act on that choice. Will we be ready?

What will be your message at the upcoming Smart Utilities Australia & New Zealand conference?
The message is fairly simple: Be prepared for change.

Quintin Tahau will be presenting a case study on Transpower’s demand response program during the Demand Side Management session of the 11th Smart Utilities Australia & New Zealand (Pullman Melbourne Albert Park, November 25-27, 2013). For more information about the event, contact info@clarionevents.asia