With the closure of its largest coal-fired power station potentially being brought forward, the Australian state of New South Wales (NSW) is further relying on renewable energy taking an important step along its path to reducing environment-altering greenhouse gasses. However, the step requires that the government of NSW support the buildout extra ‘firming’ capacity to meet peak electricity demand when renewable energy sources like sun and wind are ‘offline’. On November 23, the NSW government announced that it had tapped Enel X to help it put its ambitious plan into action.
Firming up a renewables-powered grid with Demand Response
Following a public tender, Enel X Australia was awarded a contract to supply the state of NSW – on Australia’s east coast – with 95 MW of Demand Response (DR) ‘firming’ capacity. Through use of financial incentives, Demand Response is a tool that electricity grid operators can use to encourage energy consumers to reduce or shift their electricity consumption from peak periods to lower energy-demand periods of the day. In this case, to encourage participation in the program, Enel X, thanks to funds from the government of NSW, will generate revenue streams for participating companies in order to reduce their energy use or switch to backup supply, when needed.
A Virtual Power Plant to supply ‘spare’ capacity, only when needed
By enabling a power reserve to meet spikes in demand that would otherwise stress the grid, the DR program will help stabilize energy supply. How? Simple: participants in the NSW program will be linked together via a “Virtual Power Plant” (VPP), which will release ‘spare’ energy into the grid when called upon, just like a physical generator. This VPP, Australia’s biggest, will be operated by Enel X; the 95 MW of Demand Response ‘firming capacity’ is equivalent to adding 19,000 residential 5KW batteries to the grid.
Rewarding businesses for using energy efficiently
The approach adopted by the NSW government provides extra capacity without the need for any infrastructure or investment, making it a quick, reliable and low-cost solution to plug gaps in energy supply and demand that may result from the state’s transition to renewables-driven power generation. “The closure of coal fired power stations is essential to meet emissions targets, but it also means we need innovative thinking and new funding models to avoid the risk of blackouts,” remarks Carl Hutchinson, Country Manager of Enel X Australia. “Demand Response is a cost-effective solution to meet this challenge. Using energy assets intelligently at key times keeps the lights on and rewards businesses.”