South Australia Power Problems, keeping the lights on
$50 million dollars. This is the cost to all South Australian consumers, just to buy back power from big companies to ensure the state wide blackouts experienced in recent times don’t happen again.
“Energy users paid $50 million in total to buy back power from major manufacturers, so as to keep the lights on in Victoria and South Australia on two occasions in the past three months.
The Australian has learned that the “Australian Energy Market Operator” (AEMO) was forced to activate its “reliability and emergency reserve trader” mechanism on November 30 and January 19, as supplies to retail customers came under threat.
The $50m price tag includes the cost of signing up businesses, standby fees and activation payments. Energy Minister Josh Frydenberg’s office confirmed.”.
The Australian: 12:00AM February 12, 2018. Ben Packham, Political reporter Canberra
Reliability and Emergency Reserve Trade scheme
To ensure adequate “demand response” and energy reserves throughout the summer period, AEMO has gained access to an additional 1100 megawatts through a program called the Reliability and Emergency Reserve Trade scheme.
This scheme pays companies to turn down electricity usage and restrict its operations for an hour or two. It also provides the option of adjusting working hours outside periods of peak electricity demand.
Could this be the answer to stop the crippling power outages SA has experienced over recent times?
So, are renewables the answer to this problem?
Is paying industry to shut down to find a power shortfall the answer to reducing the peak demand issue?
How do we reduce peak demand and stop the need to pay these big companies in the first place?
Is there a need to bring online idle power plants for short periods of time to compensate for peak demand?
Enter Demand Response.
What is the reason Demand Response is not being embraced by the generation system or retailers?
It all seems to come down to a reduction of profit margins for the generation suppliers and the energy retailers. “The Australian” has an easy to read and very good article on this subject. They surmise, that due to the high energy prices at peak times the “gentailer” is profiting greatly from selling power to consumers at highly inflated prices. Therefore introducing Demand Response (DR) would reduce the price they can sell energy to the consumer.
“In the long term, such a gentailer may have an incentive not to engage in activities that reduce spot prices (like wholesale demand response) … and that all of these factors are hindering innovation on the demand side, to the detriment of consumers.”
(Gentailer. The term ‘gentailer’ or gen-tailer is a portmanteau word combining the terms generator and retailer, i.e. gen-tailer. This is a reference to the vertical integration of companies operating in the NEM, where generators own a retail arm.)
“Despite a theoretical ‘efficient incentive’ to pursue wholesale DR, too few retailers are doing so. Innovation and competition are being stifled as a result,”