Demand side participation

Key insights

• Demand side participation (DSP) reflects the capability of demand side resources (customer load reductions or generation from customers’ embedded generators) to reduce operational demand at times of high wholesale prices or emerging reliability issues.
• DSP captures direct response by industrial users, and consumer response through programs run by retailers, DSP aggregators, or network service providers.
• DSP by consumers is expected to increase. This is projected to be driven initially by commercial/industrial consumers, with DSP controlled by retailers or specialist aggregators providing price hedging and potential ancillary services and reserves to the market. Longer term, as more households get smart meters and tariffs that reward changing consumption based on market conditions and new trading platforms such as peer-to-peer, residential DSP is also expected to increase. AEMO has a work program over the next 12 months to explore the possible extent and impact of the growth in residential DSP, the outcomes of which will guide the evolution of AEMO’s business capability to respond to the expected challenges.
• The estimated level of DSP available for 2017–18 is shown in the tables below. The estimated price response is 109 megawatts (MW) combined for all regions when prices exceed $1,000 a megawatt hour (MWh). For reliability response, this is 512 MW across the NEM during summer.
• This is lower than the 2016 National Electricity Forecasting Report (NEFR) estimate of 701 MW of reliability response during summer. Last year’s estimate included approximately 50 MW of DSP response from a number of smaller diesel generators (including back-up generators) which has this year been captured directly in the maximum demand forecast. Much of the reported DSP from surveying retailers, DSP aggregators, and network businesses has also already been reflected in the maximum demand forecast.
• Potential short-term growth in DSP (beyond what is listed in the tables below) is forecast from:
  • AEMO and ARENA’s DSP project, which is seeking up to 100 MW in South Australia and Victoria combined.
  • Any DSP procured through the Reliability and Emergency Reserve Trader (RERT) process.
  • DSP from the coal seam gas (CSG) sector in Queensland (could be through the RERT process). Based on demand response from Queensland’s LNG/CSG sector to date, AEMO has lowered its assumption of reliability response from the LNG sector to 150 MW, from 300 MW in the 2016 NEFR.