The efficiency bite out of VIC's peak demand

This is an edited extract of a report prepared for the Energy Efficiency Certificate Creators Association.

Victorians experienced unprecedented high temperatures in the week ending January 17 with four days in a row exceeding 41 degrees. This led to increased use of electricity-hungry air conditioners placing the electricity system under stress and, in turn, resulted in power outages in some areas. Victoria is likely to have reached a new record peak demand for electricity if it had not been for the contribution of energy efficiency activities under the Victorian Energy Efficiency Target Scheme.

The VEET Scheme, also known as the Energy Saver Incentive, ESI, commenced operation at the beginning of 2009 and has supported the installation of a broad range of energy efficiency activities across Victoria. The scheme aims to make energy efficiency more affordable for Victorian businesses and households, and helps to reduce energy costs through reduction in energy use. The scheme gives access to discounts and special offers to Victorian businesses and households on the installation of selected energy saving products and equipment.

Like solar photovoltaic panels, the impact that energy efficiency activities have had in more than 1.2 million installations across Victoria is not visible to the electricity system. The Australian Energy Market Operator monitors electricity requirements at the transmission system and the contribution that energy efficiency has made is difficult to determine. Green Energy Trading has released a report for the Energy Efficiency Certificate Creators Association to unmask the contribution of energy efficiency activities implemented under the VEET Scheme since its inception in 2009.

The VEET Scheme has resulted in savings of a remarkable 1852 gigawatt hours, equivalent to 3.7 per cent of Victoria’s annual electricity use. This is significant and continues to grow. Most of the current energy efficiency has been delivered in Victorian homes which has enabled householders to avoid some of the recent electricity price increases.

Importantly during the January heatwave, we conservatively estimate that VEET initiatives made a modest but important contribution to reducing peak demand by 1.8 per cent or 187MW – the equivalent to the operation of a unit of a gas-fired generator.

As illustrated below, without the contribution from the VEET Scheme the peak demand at 4pm on January 16 would have been 10,427 MW, exceeding the previous electricity peak of 10,415 MW reached on Thursday, January 29, 2009 in the lead up to the Black Saturday bushfires.

Figure 1: VEET contribution to reducing peak demand on 16 Jan 2014 (MW)

The table below details which VEET-supported activities we estimate contributed to this 187 MW peak demand reduction.

Figure 2: Reduction in power consumption and peak demand from ESI activities (from Jan 2009 to Dec 2013)

Notes: (i) 40 per cent of energy savings from weather sealing activities are assumed to be electricity savings (ii) Commercial lighting savings are greater during peak hours than average as additional electricity is saved by requiring less air conditioning.

To date, the VEET scheme has focused on residential activities and we have conservatively de-rated the impact that they will have on peak demand. The NSW scheme has mainly covered commercial and business activities that will more directly lead to reductions in peak demand. The NSW scheme, for example, is likely to have resulted in a more significant peak demand reduction of more than 256 MW.

To date, less than 5 per cent of certificates in Victoria have been created from commercial or business activities. Unlike in NSW, the government has been slow to roll out business activities and little activity has taken place to date. If the scheme is continued and expanded to include business activities, as in NSW, then the contribution that the scheme could make to reduce Victoria’s peak demand would be much more significant.

Additional benefits

Electricity consumers who have not implemented activities have still gained benefit from the scheme as the lower demand has meant that much higher-cost generators have not had to be dispatched. As a result, the wholesale power price has not risen anywhere near as high as at other times when we have reached very high levels of demand.

In addition, during the heatwave a number of customers lost electricity due to local distribution assets coming under pressure because of the greater demand. While difficult to quantify, energy efficiency activities implemented will have reduced the pressure on electricity distribution infrastructure meaning that fewer customers were exposed to loss of service.

The scheme can make a much more material contribution in assisting Victorian households and businesses to reduce their energy use and reduce the demand for electricity at peak times. The ESI is one of the few initiatives that the Victorian government has to address peak power needs.

The Victorian government is currently undertaking a review of the future of the Scheme. The Energy Efficiency Industry is calling on the government to maintain the scheme at the current target level and to broaden the number of activities, particularly for business activities.

Ric Brazzale is the Managing Director of Green Energy Trading and a Director of the Energy Efficiency Certificate Creators Association.

This is an edited extract of a report prepared for the Energy Efficiency Certificate Creators Association.

Appendix -  Estimating the contribution of standby power controllers

As Standby Power Controllers (SPCs) have accounted for 47 per cent of certificates and have come under some recent scrutiny it is worth considering their impact in more detail.

The ESC undertook a detailed assessment of SPCs and presented their findings to the VEEC Forum on 22 June 2012. It found that the level of abatement, after allowing for the removal of some appliances, was within the bounds that had been initially modeled when determining the abatement factor for the activity.

The ESC announced on 6 September 2013 that following another review of the SPC activity it was adjusting downwards the abatement factor for future installation of SPCs. For Advanced Audio Visual (AV) SPCs the abatement factor would be adjusted by 55 per cent and for Advanced IT SPCs a 62 percent factor was to be applied. These factors account for changes to a range of variables in standardised Victorian household energy use, the level of market penetration, and post-installation consumer behaviour. These changes were effective for all advanced AV and IT SPC activities undertaken from Monday 7 October 2013.

Over 39 per cent of the 1.2 million sites with SPCs were installed prior to 30 June 2012. At this time the survey results had indicated that the abatement was within the bounds of the modelling. We have applied the abatement adjustment factor of 55 per cent (assuming that the vast majority of SPCs were Advanced AV) from 1 July 2012. We have then arrived at an adjustment factor of 72.5 per cent to be applied to all SPCs installed since the start of the scheme. We believe that this is a reasonably conservative estimate to be applied to determine the total annual energy savings.

Based on field trials, energy savings from SPCs tended to be fairly uniform over the course of typical working days, with a bit more variability over weekends. During the peak power demand periods over January 2014, energy savings from SPCs are likely to have been higher than average as more families are likely to have been home (due to school holidays) and more families are likely to have been indoors using appliances (due to the excessive heat). We have nevertheless adopted a very conservative approach and assumed that only 80 per cent would be available at peak times.