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Monday, March 2, 2015

Electricity peak period pricing a poor idea

The Australian Energy Regulator processes data into a graph showing seasonal peak period demand in energy market regions.

Seasonal peak electricity demand (by region)
Seasonal peak electricity demand (by region)
An article by RMIT authors Yolande Strengers and Larissa Nicholls "Feral o'clock: why families struggle to shift their energy use" observes -
"A key plank of the Australian Government’s draft energy policy is to reform electricity pricing so that it more accurately reflects rises and falls in peak demand."
and -
"But research we have published today suggests that this policy focus is missing other opportunities to shift electricity demand. Research with parents reveals that many household routines are unlikely to shift in response to cost-reflective tariffs..."
When you drill down into the electricity demand data - summarised beyond recognition by the Australian Energy Regulator - you may well conclude that encouraging families to shift electricity demand is not only difficult. It is also pointless.

The strategy of demand-response players, such as EnerNOC, is far more precisely targeted at the underlying problem -
"Demand response allows energy users of all kinds to act as “virtual power plants,” adding stability to the grid by voluntarily lowering their demand for electricity. Participants in demand response programs get paid for providing demand response capacity..."
The "peak seasonal demand" for New South Wales in Summer 2012/2013 is shown by the Australian Energy Regulator to be about 14,000 megawatts (MW) during the peak 30 minute electricity market interval during December 2012 - February 2013.

Graphing the source data from the Australian Energy Market Operator for this period shows that peak demand rarely went above 10,000 megawatts. Promoters of time-of-use charging may want to install generating and network capacity to supply 40 percent more electricity - 14,000 megawatts - for one to two hours each summer, and earn a profit from this grossly excessive capital investment. EnerNOC has got the right approach: pay a few electricity users to turn off discretionary plant and equipment for one or two hours each summer, and save the extravagant wasted investment.