Demand Management Plan - April 2020 - Energex
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Demand Management Plan 2020-21 Contents EGM message 3 Introduction 4 About us 5 Demand management 6 What is it? 6 Customers participating in our DM program 7 Challenges and opportunities shaping our strategies and plan 8 Customer value 8 Demand outlook 8 Renewables 8 Climate change 8 Fringe of grid 8 Electrification of transport 9 Customer expectations 9 Regulation and policies 9 Case study – Electric Vehicles (EVs): Discovering customer charging and energy use 10 Our strategy and plan 11 Overview 11 Our principles 11 Our strategies and initiatives 12 Our program 13 Case study – Market delivered Demand Response (DR) 14 DM program budget and targets for 2020-21 15 COVID-19 impacts 15 Energex forecast expenditure and targets 15 Ergon Energy forecast expenditure and targets 15 2
Demand Management Plan 2020-21 Message from our Executive Across the globe, a renewable expertise and key partnerships, energy revolution is unfolding. we are well placed to deliver This is an exciting time that best practice DM and to continue presents both challenges and evolving our strategies and opportunities. During this time, approach to adapt to a high networks must remain focussed penetration DER future. on safety; affordability; enabling Finally, I would like to thank all connection and optimisation of the customers, industry partners distributed energy resources and DM providers already (DER); maintaining security and participating in our DM Program. reliability and most importantly, We are only as strong as these understanding and delivering partnerships. I look forward to what our customers value. working with our existing and Demand Management (DM) new customers and partners will continue to be important, during 2020/21 and beyond. particularly as the amount of variable generation, transport electrification and climate variability increases. DM will also complement the roll-out, where cost effective, of alternative energy supply solutions to Peter Price customers (for example, in Fringe Head of Corporate Strategy, of Grid areas). Executive General Manager The recent merger of Energex Strategy, Asset Safety and and Ergon Energy has Performance strengthened our position as the largest DM program in Australia. With our depth of experience, 3
Introduction Each year Energex and Ergon • are cost efficient – working with • help achieve the Queensland Energy publish a Demand customers, DM providers and renewable energy target – Management Plan (DM Plan) to industry partners to deliver cost by enabling connection of engage and inform our customers, efficient initiatives to reduce distributed energy resources DM providers and industry peak demand and improve (DER) to the grid partners on our planned DM network utilisation • are fair and equitable – by Program for the next five years. It • improve safety, security and unlocking the value of DM forms part of a suite of strategies reliability – by coordinating services for all, not just those to deliver safe, affordable, network and customer with direct access to DER. secure and sustainable energy resources to work together solutions. Consistent with Energy The DM plan meets Energex • activate the market and and Ergon Energy’s regulatory Queensland’s purpose, the DM transition – by paying for DM requirements under section Plan outlines initiatives that: services where they provide 127C the Queensland Electricity • are customer centric – value and responding to Regulation, which requires an supporting customers in their regulatory and market changes annual DM Plan to be submitted energy choices for each upcoming year. 4
Demand Management Plan 2020-21 About us Our network We are proudly part of the centres to remote communities Energy Queensland Group, a of outback Queensland and the 7,247 Queensland Government owned Torres Strait. Energex’s network employees organisation, and together supplies electricity to homes we strive to deliver on our and businesses in the South East 34 stand-alone and vision to energise Queensland region of the State. The South grid-connected power stations communities. As Energex and East Queensland region includes Ergon Energy, our role is to the major urban areas of Brisbane, operate the distribution networks Gold Coast, Sunshine Coast, across Queensland. The Energex Logan, Ipswich, Redlands and 220,000km and Ergon Energy electricity Moreton Bay. powerlines distribution networks cover 1.7 million km2 across Queensland. 1.7 million Ergon Energy supplies electricity power poles to homes and businesses over a 3 vast area covering around 97% of network control the State – from coastal and rural centres 2.3 million connected customers Our service area 34,500GWh electricity delivered a year Boigu Is. Saibai Is. Dauan Is. Stephens Is. Yorke Is. Darnley Is. 5,086MW 2,612MW Mabuiag Is. Yam Is. Murray Is. South East Regional Coconut Is. Bamaga Badu Is. Warraber Is. Queensland Queensland Hammond Is. Kubin, Moa Is. peak demand peak demand Mapoon Thursday Is. Wasaga, Horn Is. Napranum 587,392 Lockhart River TORRES STRAIT Aurukun Coen solar energy systems connected Pormpuraaw 3,365MW Kowanyama Cooktown Gununa, Mornington Is. renewables Mossman Regional network - Ergon Energy Network connected Cairns Mareeba Isolated supply - Ergon Energy Network Burketown Atherton Normanton Innisfail Doomadgee Ravenshoe Ergon Energy Retail Tully Georgetown South East Network - Energex Ingham Palm Island Townsville Home Hill Camooweal Julia Creek Charters Towers Bowen Mt Isa Cloncurry Hughenden Proserpine Richmond Gympie Pinnacle Mackay Noosa Sarina Nambour Moranbah Winton Maroochydore Clermont Caloundra Boulia Middlemount Yeppoon Kilcoy Woodford Longreach Rockhampton Emerald Caboolture Barcaldine Blackwater Gladstone Toogoolawah QUEENSLAND Springsure Redcliffe Bedourie Biloela Miriam Vale Esk Blackall Moura Monto Jundah Gin Gin Bundaberg Fernvale Brisbane Theodore Childers Windorah Hervey Bay Gatton Biggenden Ipswich Maryborough Birdsville Mundubbera Beenleigh Gayndah Charleville Kilkivan Quilpie Wandoan Surfers Paradise = Kingaroy Murgon Roma Chinchilla Yarraman Boonah Beaudesert QUEENSLAND Tara Dalby Toowoomba Cunnamulla Millmerran Brisbane St George NEW SOUTH WALES Warwick Stanthorpe 5
Demand Management Plan 2020-21 DEMAND MANAGEMENT What is it? Demand Management (DM) is response to growing DER in the customers with tools that enable part of our suite of solutions network, DM must evolve to them to manage their demand for network management include consideration of these and consumption to reduce their which may be used instead of customer assets to optimise end- electricity costs. or in conjunction with network to-end investment. There are three major DM expenditure, to ensure an DM can also be particularly approaches as outlined in the optimised investment outcome. valuable when there is uncertainty table 1 and shown in figure 1. In the context of electricity in demand growth forecasts, as networks, DM is the act of These approaches are DM does not lock in long-term modifying demand and/or implemented by customers or DM investment. In these situations, electricity consumption, for the providers in exchange for financial DM can provide considerable purpose reducing or delaying incentives via their electricity bill ‘option value’ and flexibility. network expenditure (i.e. or directly from networks. removing or delaying a network DM solutions are also known constraint). This definition DM must be deployed to match as non-network solutions as recognises that DM need not be the temporal (i.e. how often and they provide an alternative to specific to removing network what duration) and spatial (i.e. network solutions. In the Energex constraints only at times of peak what level of the network and how and Ergon Energy context, demand. Rather that network many customers are affected) DM involves working with our constraints also include retirement nature of the network constraint. customers and DM providers to or replacement of an aging asset; As more DER is connected to our modify demand and/or energy redundancy support during network, the temporal and spatial consumption as an alternative equipment failure; minimum nature of network constraints to capital expenditure. The more demand and associated issues will change. As such, our DM capital expenditure that can be with voltage, system frequency capability will need to adapt to deferred or avoided, the greater and power quality management; suit these new and emerging the savings to our customers. managing diverse power flows network constraints. Furthermore, DM provides and system security issues. In Peak shaving DM Approach Description Type of DM Reducing demand at peak period (e.g. 1 Peak shaving Using onsite generation) Shifting demand to other times of Demand the day when networks are less Response (DR) Load shifting 2 Load shifting constrained (e.g. Load control tariffs). Load shifting can be used to manage peak demand and minimum demand. Use less electricity to perform the Energy 3 Energy efficiency same task. efficiency Energy efficieny Table 1: DM Approaches Typical residential customer load profile Load after demand management measure Figure 1: Demand Management Approaches 6
Demand Management Plan 2020-21 Customers participating in our DM program Our DM Program is only as strong as our partnerships with customers, industry partners and DM providers. Energex network Ergon Energy Number of Customers area network area Customers with load control tariff# 711,256 408,219 Customers with PeakSmart air conditioners# 74,579 4,341 Customers who have reduced demand in Target areas* 548 256 # As at 31 March 2020 and reported to AEMO *Includes contracted demand response (non-network generation contracts) Premises with controlled load Premises with PeakSmart Premises with reduced demand in Target Areas Figure 2: Energex and Ergon Energy Managing Demand in Queensland 7
Demand Management Plan 2020-21 CHALLENGES AND OPPORTUNITIES SHAPING OUR STRATEGIES AND PLAN Customer value Renewables Climate change • Affordability remains a core • The Queensland government • Climate change is increasing concern for many customers. has set a target to achieve 50% the probability of extreme Energex and Ergon Energy renewable energy by 2030. weather events and average are committed to doing all we • The connection of solar energy temperatures. The economic can to take the pressure off continues to grow across both implications on our electricity electricity prices by continuing networks. During 2018-19, networks are potentially to drive down our cost of rooftop solar PV was being significant and therefore distributing electricity. connected to our South East necessitates increasing network network at a rate of over 2,900 adaption and resilience, while systems per month. In Regional also ensuring we can respond Demand outlook Queensland the volume of new quickly and safely during and after extreme weather events. solar PV connections in 2018-19 • Peak demand continues to was almost 50% higher than in increase, albeit at a lower rate. the previous 12 months, with the Our network experienced total solar PV capacity added being 300% higher due to the Fringe of grid record levels of peak demand in the summers of 2017, 2018 connection of several large solar • Many of our customers in and 2019. Discrete areas of farms. The future intention of remote areas of Queensland are the network are experiencing customers to install solar PV is serviced by low density three strong growth, requiring strong, with 48% of households phase or Single Wire Earth augmentation projects to stating that they will have or Return (SWER) technology. Our address demand growth. intend to have a system in the SWER network is the largest in next three years1. • Changes to energy flows and the world and includes 65,000 demand are occurring due to • A growing number of km of line. Around 4% of growing numbers of DER and households are installing a Ergon Energy’s customers are new technologies interacting battery as part of their solar provided electricity via SWER. with the grid. New daily load PV installation. Around 1% of all • DER (e.g. solar pump) and/ profiles are emerging with solar PV installations also have a or Stand-Alone Power the ‘hollowing out’ of demand battery installed and almost one Systems (SAPS) can provide, during the middle of the day in three Queensland households in some cases, cost effective due to distributed solar PV intend to install a battery alternatives to network generation. storage system in the next 10 delivered electricity supply. years (28%)2. It is expected that customers with batteries • Changes in regulation are will increasingly participate in currently under consideration Virtual Power Plants (VPPs) and that enable distributor and third provide DR services from their party led SAPS to be installed battery to DR aggregators. where economically efficient. • A critical challenge for electricity networks is the ability to host increasing levels of DER. This will require collaboration with industry, evolution in connection standards, investment in smart grid technologies and digital platforms to better manage the high penetration of DER. 8
Demand Management Plan 2020-21 Customer Electrification of Regulation expectations transport and policies • From our stakeholder • In Australia, there has been a • This DM Plan is consistent engagement, we heard that very slow uptake of electric with national regulations there is strong support for vehicles to date, but this is aimed at encouraging network continuing our DM Program. expected to increase. This businesses to make efficient Key expectations from our is due to transport modes, planning, investment and customers and stakeholders including fleet vehicles expenditure decisions and to include: and public transport, being explore non-network options, • To partner with them to increasingly electrified globally. including manage network demand This coupled with increasing • Distribution annual planning into the future affordability of Battery Electric – refer to our Distribution Vehicles (BEV) battery packs, Annual Planning Review and • To continue to provide will see greater future uptake Reports (DAPRs) – Energex incentives to customers and/ of BEVs in Queensland, driving DAPR and Ergon Energy or DM providers to provide greater electricity demand DAPR DM solutions across the state. • To extend the eligibility • Demand Side engagement • At the end of June 2019, there obligations – refer to our of load control tariffs to were 1,000 BEVs and almost Demand Side Engagement other customer groups (e.g. as many Plugin Hybrid Electric Strategy agriculture, large commercial Vehicle (PHEVs) registered in and industrial) to help • Regulatory investment Queensland. With the recent manage network demand test for distribution release of several new models, • To facilitate the integration (RIT-D) – refer to Energex this has grown to just under of renewables into the consultations/Ergon Energy 2,000 BEVs and 1031 PHEVs network consultations (29 February 2020). By June • To help provide products 2021, it is forecast there • This DM Plan is also consistent and solutions to manage will be around 6,500 EVs in with national electricity their energy, demand and total (PHEVs and BEVs) in reforms currently underway prices Queensland. aimed at delivering customer- oriented electricity network • If EV charging is unmanaged, transformation. the additional load on the network is likely to coincide with the existing evening peak. Initial insights indicate owners Intelligent Grid of electric vehicles nearly Enablement always charge at home (83%), with many able to control when • The electricity market is they charge (54%)3. evolving which presents • Vehicle to Grid (V2G) charging a transition challenge for technology, whilst at an early all participants, both new stage of development, is and existing. A successful expected to provide a range of transition will enable networks energy services including DR in to integrate sophisticated the future. energy management platforms provided by new market participants with their existing 1 Energy Queensland, Powerlink (2020) Queensland Household Energy Survey 2019 Insights Report (n=4,536) distribution management 2 Energy Queensland, Powerlink (2020) Queensland Household Energy Survey 2019 Insights Report (n=4,536) 3 Energy Queensland, Powerlink (2020) Queensland Household Energy Survey 2019 Insights Report (n=46) systems. 9
Demand Management Plan 2020-21 CASE STUDY Electric Vehicles (EVs): Discovering customer charging and energy use To plan for network impacts associated with Electric Vehicles (EVs) we have partnered with the EV monitoring and charge management provider, Fleetcarma to undertake a research program on customer charging behaviour; both at home and away from home. The research funded by the Demand Management Innovation Allowance Mechanism (DMIAM) will involve up to 200 EV owners (battery only and plug-in hybrid), with cars registered within Queensland. Those participating in the research will receive $100 and gain access to an online portal to see their charging and trip activity. An additional $100 will also be available for those owners who allow charging The study will give invaluable the demand on the network management of their EV. A range information on how EV owners over time. These patterns will of different EVs will be selected, use their vehicle and their be used for network planning as well as, different households approach to “refuelling” with to ensure that, as the EV (e.g. with and without solar PV electricity. This information market grows, the network is and batteries). will then be used to able to meet the new demands generate baseline electricity being placed on it. consumption profiles, showing 10
Demand Management Plan 2020-21 OUR STRATEGY AND PLAN Overview Our principles The DM Plan for 2020-21 sets out Our six guiding principles, how we will continue to work with that underpin the DM Plan, are our customers, DM providers and based on the Energy Network industry partners over the coming Transformation Roadmap year. Our plan is ultimately about (ENTR)4 balanced scorecard. reducing network costs through These principles have been used implementing effective and to prioritise our initiatives and efficient DM activities. We will activities. See figure 3 below. build on our existing initiatives 4 https://www.energynetworks.com.au/projects/ and deliver on our goal of electricity-network-transformation-roadmap/ providing a secure and reliable network. We will continue to listen to our customers, DM providers and industry partners and continuously strive to innovate to future proof our DM Program. Customer centric – supporting end use Cost efficient – customers in their working with end use energy choices customers and industry partners to reduce peak Queensland demand and improve renewable energy network utilisation to target – enabling keep costs down connection of distributed energy resources (DER) to the grid Signalling the market – paying for DM services where they deliver value LO ALU N Y V TI RG W ED ER SI E N N O B ER A E IL V TR AN S LS IC LE FO ES C R CUSTOMER CHOICE AND CONTROL SA AN S D FE D S VE N TI S A ,R E EL CU EN S C E IA RE IN IRN B LE FA Fair and Improve safety, equitable – unlocking security and reliability – the value of demand by coordinating response for all end use network and customer customers, not just resources to work those with distributed together energy resources Figure 3: Our principles 11
Demand Management Plan 2020-21 Our strategies and initiatives Our Program Related Initiatives Strategy DM Initiatives – – what we will what we will do support Ensure efficient investment decision making Broad based Investment Planning Process We will continue to engage with customers and DM providers to seek DM Targeted solutions to provide cost-effective alternatives to network options. This approach will enable us to leverage investment across the electricity supply chain and deliver efficient, well planned network expenditure and apply downward pressure to network prices in the longer term. Incentivise customer efficiency Broad based Investment Planning Process We will continue to provide incentives to customers and DM providers to Targeted provide DM solutions as part of our approach for delivering efficient non network options to defer, avoid or complement network investment. In the medium term, ’smart’ DER (e.g. demand responsive batteries or BEVs) are expected to provide an increasing proportion of DM solutions, either directly or via DR aggregators. Active customer response enablers DM Development Intelligent Grid Enablement We will maintain direct control of customer loads using our existing Audio Frequency Load Control (AFLC) capability. We will complement this capability, where cost efficient, by procuring and dispatching DR. The procurement and dispatch of DR will require investment in intelligent grid technologies and digital platforms. This will be implemented as part of Energex and Ergon Energy’s broader ‘Intelligent Grid Enablement’ investment plans. This enhanced capability will reduce network augmentation requirements and increase DER hosting capacity. Manage two-way energy flows DM Development Intelligent Grid Enablement We will trial and test DM solutions to increase DER hosting capacity while maintaining reliability and power quality performance at statutory levels. This is in line with our customer expectations and the Queensland Government target of achieving 50% renewable energy by 2030. Transforming supply at the fringe of grid DM Development Fringe of Grid Transformation We will continue to look for opportunities for DM to reduce the cost of electricity supply in remote areas. DM can be used to reduce the size and cost of customer DER and stand- alone power systems (SAPS) and form part of an integrated, cost-effective alternative to traditional network solutions. Support our Program by investment in innovation DMIAM DMIAM We will continue to undertake innovative trials and projects to test and validate DM solutions. These trials will be supported by funding available under DMIAM and will be targeted to accelerate future DM capabilities. 12
Our program Description 2019-20 2020-21 Focus areas 2020-25 Initiative: Broad based This initiative is available to residential Existing • Continue to reduce costs of delivery. Proposed and small business customers across the • Continue to align Ergon and Energex programs to whole network. It delivers direct control of • Enhance the customer and community experience continue loads during periods of extreme demand • Improve PeakSmart application process for Ergon or emergency response, preventing area Installers and industry partners problems and network outages. Incentives are provided to customers who enrol their PeakSmart air conditioners or connect their appliances to load control tariffs. Incentives are also given to industry partners who install PeakSmart enabled air conditioners. Initiative: Targeted This initiative is available to customers and Existing • Continue to align Ergon Energy and Energex Proposed DM providers who can deliver DM solutions programs to in specific areas of the network identified as • Continue to publish incentive maps that show where continue having future network constraints. DM solutions are required Market engagement is undertaken to seek • Deliver on our Demand Side Engagement Strategy to DM solutions from customers and DM improve market engagement providers. • Increase DM solutions (non-network solutions) delivered through Investment Planning Processes Incentives are provided to customers or DM providers to provide DM solutions. Initiative: DM Development This initiative drives continuous Existing • Enhance web content on DM activities Proposed improvement of existing initiatives and • Enhance web content on electric vehicles to enabling future DM capability. continue Tariffs • Support uptake of new load control tariffs • Support wider Ergon Energy/Energex uptake of new tariffs • Finalise implementation of Queensland Government funded Large Customer Adjustment Trial (LCAT) and Large Customer Adjustment Program (LCAP) Fringe of Grid • Pilot customer DM program Intelligent Grid Enablement • Prepare Load Control Strategy to guide future investment in digital platforms • Support development of AS/NZS 4755.2. This Standard provides framework for DR from customer appliances (including air conditioners, BEVs, hot water systems and pool pumps) • Based on trial results, expand ‘solar soak’ using existing AFLC capability to increase DER hosting capacity. Initiative: DMIAM The initiative supports future energy choices Existing • Fringe of grid alternative supply options Proposed and DM capabilities that reduce long term • Managing network and distributed energy resources to network costs. for fringe of grid areas continue A suite of innovative trials and projects • Facilitating enhanced distributed energy resource to test and validate DM products and connection processes are funded via DMIAM. • Evaluation of Home Energy Management Systems • Electric vehicle customer charging and energy use Every year progress on DMIAM projects • Acquiring load management through energy services are published, refer to our annual DMIAM market (Energex/Ergon Energy). • Integrated urban development energy management 13
Demand Management Plan 2020-21 CASE STUDY Market delivered Demand Response (DR) As distributed energy resources HEMs have the potential to become more common-place save customers money on their in homes, we need to better electricity bills, give them access understand the value and to new value opportunities opportunities they present for and improve the use of their customers and the networks renewables, while maintaining supporting them. their lifestyle. HEMs could also deliver benefits to the network In October 2019, Energex through improved load factor commenced a pilot to trial DR and reduced impacts of peak using home energy management generation from solar PV systems (HEMs) in up to 500 installations. households across the Chapel Hill, North Lakes, Springfield Recent research has Lakes and Wakerley areas. Five shown customer interest in HEMS providers are participating HEMs services is greatest in the pilot, offering varied around receiving personal energy management services and recommendations on how to products. save and being able to remotely control appliances to manage The DMIAM funded pilot electricity usage. Over half (54%) replicates a normal market where of survey participants would HEMS suppliers attract customers install a HEMS if it was $200 or with the inherent value of their less5. offers. Incentives for customer participation are paid to the If successful, both networks HEMS provider instead of to the would be able to complement end customer. their existing legacy load control capability with cheaper, more The pilot will provide information flexible, sophisticated energy on how HEMS providers can management platforms provided attract customers to take up their by energy service providers. market solutions; the value of these solutions to the customer and network; the attractiveness of set-and-forget “smart” solutions; and how HEMS technology will integrate and communicate with the electricity network. 5 Energy Queensland, Powerlink (2020) Queensland Household Energy Survey 2019 Insights Report (n=4,536) 14
Demand Management Plan 2020-21 DM PROGRAM BUDGET AND TARGETS FOR 2020-21 COVID-19 impacts At the time of finalising the DM Plan, the level of impact the COVID-19 pandemic will have on the forecast spend and achievement of performance targets for 2020-21 is unclear and has not been included in the tables below. Energex forecast expenditure and targets The forecast expenditure to Operating Capital Total Demand implement Energex’s DM Program Initiative Expenditure Expenditure Expenditure Reduction $/kVA for 2020-21 is estimated at $5.90 ($,000) ($,000) ($,000) (MVA) million, as show in Table 3. The Broad based 3,706 - 3,706 17.8 209 table also provides the breakdown of performance targets for each Targeted 1,226 - 1,226 16.3 75 initiative. DM Future year MVA demand 970 - 970 n/a n/a Development reductions may also change year Total for to year dependent on program 5,902 - 5,902 34.1 n/a DM Program focus and customer uptake of DMIAM 1,100 - 1,100 n/a n/a new technologies. Table 3: Energex direct costs (excludes overheads) Ergon Energy forecast expenditure and targets The forecast expenditure to Operating Capital Total Demand implement Ergon Energy’s DM Initiative Expenditure Expenditure Expenditure Reduction $/kVA Program for 2020-21 is estimated ($,000) ($,000) ($,000) (MVA) at $5.09 million, as show in Broad based 841 - 841 3.5 242 Table 4. The table also provides the breakdown of performance Targeted 3,713 - 3,713 26.3 141 targets for each initiative. DM Future year MVA demand 543 - 543 n/a n/a Development reductions may also change year Total for to year dependent on program 5,097 - 5,097 29.8 n/a DM Program focus and customer uptake of DMIAM 1,100 - 1,100 n/a n/a new technologies. Table 4: Ergon Energy direct costs (excludes overheads) 15
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