Rapid response network for peak load power

PERTH energy aggregator Rob Rohrlach is proud to call himself a ‘negative’ power generator.

He regards his company, Energy Response, as a green business because it helps to supply power for Western Australia’s unique electricity market in times of peak load demand.

Mr Rohrlach’s carefully negotiated and contracted 23 megawatts of electricity forms part of WA’s fast-growing demand side response (DSR) market, designed to meet strict power electricity capacity requirements in the state.

This power source came in handy in February this year when DSR, projected to be WA’s single biggest power source within two years, helped keep the lights on over three hot days as demand rocketed and a cyclone disrupted domestic gas supplies.

Big power-hungry users were quickly called on to cut their usage for defined periods, helping to shift demand and put precious megawatts back into the electricity grid.

It was a rarely used response by energy authorities to a peak-load event, as cyclone Carlos moved down the Pilbara coast, forcing Apache Corporation, which supplies about 30 per cent of the state’s domestic gas, to halt production at its Varanus Island facilities.

The combination of cuts to gas-fired power generators, which make up about a third of the state’s generation, and the hot weather in late February, triggered a complex, market-based call on power reserves.

These reserves are partly based on contracted power users cutting their usage for agreed periods and selling it back into the grid, smoothing demand and enabling the system to function within capacity.

DSR, also known as demand supply management (DSM), is running at 150MW of about 5000MW of capacity needed by WA’s wholesale electricity market (WEM) and is projected to hit about 450MW by 2012-13.

The state’s next biggest single power generators are at Collie (330MW, coal) and NewGen at Kwinana (320MW, gas).

Total wind power in the state also accounts for about 400MW, and will be boosted next month when the $750 million Collgar Wind Farm, near Merredin, starts operating.

The WEM operates in the South West Interconnected System, which covers about 2 million people and includes Geraldton, Albany and Kalgoorlie.

The system is not connected to the national grid and is classed as one of the largest isolated electricity grids in the world.

DSR is becoming an increasingly important part of WA’s capacity market, according to Allan Dawson, chief executive officer of the state’s Independent Market Operator.

“We procure DSR two years out, so we know that by 2012 DSR will be about 8 per cent of the capacity market,” Mr Dawson said.

He described the role of DSR, which essentially removes the need for the state to build another power station in the mid-term, as ‘‘material’’ to the market.

The recent power crunch tested the state’s restructured electricity supply and retail market, set up mid last decade, and comes as the Barnett government moves to establish a new energy policy for the next 20 years.

It also comes as the state grapples with rising electricity prices, and increasing and diversifying its domestic gas supplies.

The WEM was set up in 2005-06 when energy capacity was low and is designed to secure capacity in excess of projected energy demand, based on a one-in-10-year peak-load event.

The market operates mainly bilaterally, between big power users, suppliers and retailers, with the balance, about 15 per cent, regulated by the IMO.

The market regulator currently pays about $131,000 per megawatt for capacity from market participants. This is due to rise to $186,000 for 2012 and 2013.

Mr Rohrlach said his company had a portfolio of 27 clients over 37 sites in WA, which agreed to cut usage for payments, usually paid quarterly.

Energy Response operated from a call centre in Melbourne and, Mr Rohrlach said, his portfolio could be mobilised on four hours’ notice.

He was reluctant to provide details about the portfolio but said some of his clients included the Southern Metropolitan Regional Council’s waste recovery plant in Canning Vale, and mineral sands company Doral.

Gross revenue for the Perth arm of the company was between $4 million and $5 million, he said.

In the recent crisis, Energy Response “delivered 23MW of demand reduction for a total period of 11 hours over three consecutive business days”, the company said.

Other participants in the DSR market include retailer Synergy, the Water Corporation, Alinta, Premier Power and Griffin. Big US-listed company EnerNOC, which specialises in DSR around the world, is due to join the market in WA in 2012.

Ken Brown, the head of System Management, the operator of the electricity network which sits within Western Power, said the February incident was the first time he could recall a three-day call on demand supply management.

System Management manages and measures the DSM process.

For Mr Brown, the value and role of DSM to the capacity market is one that is finely balanced.

A veteran network operator in WA, Mr Brown said DSM had an important role to play in providing energy capacity, but argued the state faced growing demands on power supply.

DSM could soon hit a level where it became unsustainable and the construction of a new generator would have to be considered.

“We will get to that saturation level, we are just trying to work out what that is,” Mr Brown said. “There are rules around it and there are technical issues.”

He said no other system in the world operated on more than about 7 per cent of DSM.

“I would like to see our reliance on DSM lower, but an incident such as Varanus would always make it interesting,” he said.

“But if I had a 400MW generator, I would run it for a lot more hours a year, and not just the 25 hours or so I would get from DSM.”

Mr Brown said the state was too reliant on the giant North West Shelf, operated by Woodside, and Varanus for its domestic gas supplies.

This would be offset as Apache brought its Devil Creek facility on line in the second half of this year. The giant Gorgon project would also add to supply in the next few years.