facilitating a more sustainable future

DSR Aggregation in Australia and New Zealand

June 2010

Michael ZammitManaging Director

facilitating a more sustainable future

What is DSR?

► An end user “Response” to:– Extreme wholesale electricity price

– Peaks in Physical network demand

– Reduced reliability or security of supply

► By:– Switching off discretionary loads

– Delaying the use of equipment for a time until the peak has passed

– Switching over their demand to an on-site generator

– Switching over to an alternative fuel source

– Combinations of the above

► Peaks usually appear for only a few hours a year (typically 20-50 hours out of 8,760 hours per year) ie less than 0.1% of the year but cost the Australian economy over $A3bn annually

facilitating a more sustainable future

Who is Energy Response?WA

NEM

NZEM

►Operating since December 2004 ►Australia and New Zealand’s most successful

independent Demand Side Aggregator ►Currently operating in 3 significantly different electricity

markets that broadly represent all major electricity market models

►Offices in Melbourne, Sydney, Perth and Wellington (New Zealand), with a total of 24 employees

►Sourced 1000’s MW of end consumers’ DSR capacity for market opportunities they cannot achieve on their own

facilitating a more sustainable future

Effect of Demand Side ResponseU

SI l

oad

Time

US

I lo

ad

Time

US

I lo

ad

Time

Dem

and

facilitating a more sustainable future

Retailers

Generators

Network Service Providers

Financial & MarketPhysical Network

C C C C C C C C C C

Millions of electricity Customers

Hedgecontracts

Independent Market Operator

Disaggregated Market Model

EnergyDollars

facilitating a more sustainable future

Retailers

Gens

NSPs

Financial & MarketPhysical Network

C C C C C C C C C C

Millions of electricity Customers

Hedgecontracts

Energy ResponseDSM

Facility

IMO DSM

Disaggregated Market Model

Price Volatility

SecurityRisk

NWpeaks

facilitating a more sustainable future

Why End Users Participate

1. Economic Benefits► Payment for participation, lowers cost of electricity

2. Advance warning of high price event or grid issue

3. Community Benefits ► Environmental –less CO2 emissions and water use

► Companies doing “the right thing” (like Earth Hour but companies get paid for participating)

► Raised awareness about energy use

facilitating a more sustainable future

Typical Demand Side Participants

► Scrap Metal Merchants and Recyclers

► Manufacturers – MDF, Cardboard, Flour Mills,

Wallboard, cables, etc

► Councils, Water Utilities, Treatment Plants

► City Buildings, Pubs and Clubs

► Many, many more►Telcos and IT Data Centres

►Cool/Cold Stores

►Quarries, Mines and Sand Plants

facilitating a more sustainable future

ER’s Core Offerings Matched to Markets

Uses for Aggregated DSR

Aust National Elec. Market

WA Market NZ Market

Reserve Capacity (instead of Reserve Generation)

Not quite right yet

Commercial product

Possible but not simple

Frequency ControlRules are changing

Being encouraged

Commercial Product

Network or Grid Support Contracts

Commercial Product

Showing interest

Commercial Product

Wholesale Price Hedging

Achievable by ER process

Not practical

Gen-Ret vertically integrated

Customer Owned Generation

Achieved by ER process

Showing interest

Showing interest

WA

NEM

NZEM

facilitating a more sustainable future

Over 400MW of Contracted Capacity

Major Programme Energy Response’s Programs

Reserve Capacity (instead of Reserve Generation)

► Reserve Capacity to NEMMCO in the NEM, 2006► Reserve Capacity via Synergy in WA, 2006-07 and 2007-08► Reserve Capacity to IMO in WA, 23MW 2010/11, 73MW from

2011/12-► Broome Reserve Capacity to Horizon Power, 2009

Instantaneous Reserves

► New Zealand SIR market in 2008 – onwards► New Zealand SIR market in 2010 – onwards

Network or Grid Support Contracts

► TransGrid 2008/09► Integral Energy 2006- and Energy Australia 2009-► TransPower (NZ) pilot 2007 & trial 2008

Wholesale Price Hedging

►NEM in 2004 (physical) – onwards►NEM from 2009 - onwards (financial)

Customer Owned Generation

► First Generator of 2x1MW in the NEM registered in 2009► 12MW now registered in May 2010 and another 40MW in the

registration process

WA

NEM

NZEM

facilitating a more sustainable future

Projects and Programs Coming Up

Major Programme Energy Response’s Likely Programs

Reserve Capacity (instead of Reserve Generation)

► Register significantly more capacity in the WEM► Capacity in the NEM (eventually when the rules are

favourable)

Network or Grid Support Contracts

► Network projects in the NEM (across 3 Australian states)► Network projects in NZ► Network projects in the WEM

Instantaneous Reserves

►100MW in New Zealand by December 2010►Developing a Load Following product to match wind output

Wholesale Price Hedging

►Expanding Physical and Financial Hedges in the NEM

Customer Owned Generation

►Expanding Generation program in the NEM►Investigating expansion of NEM program into WEM and NZ

International Expansion

► Investigation of potential markets outside of Australia and New Zealand

facilitating a more sustainable future

TECHNOLOGIES AND COMMUNICATIONS

facilitating a more sustainable future

Frequency Control Technology

Over 50 units installed and a further 300 units scheduled for installation by November 2010 to provide +100MW of curtailable load for frequency control

facilitating a more sustainable future

Under Frequency Event ReportingUnder Frequency Event

Load Trip Recorded as Wellington Port Cold Store 22 September

48.6

48.8

49

49.2

49.4

49.6

49.8

50

50.2

50.4

50.6

2007

-09-

22T

05:3

4:18

.74

2007

-09-

22T

05:3

4:19

.22

2007

-09-

22T

05:3

4:19

.70

2007

-09-

22T

05:3

4:20

.18

2007

-09-

22T

05:3

4:20

.66

2007

-09-

22T

05:3

4:21

.14

2007

-09-

22T

05:3

4:21

.62

2007

-09-

22T

05:3

4:22

.10

2007

-09-

22T

05:3

4:22

.58

2007

-09-

22T

05:3

4:23

.06

2007

-09-

22T

05:3

4:23

.54

2007

-09-

22T

05:3

4:24

.02

2007

-09-

22T

05:3

4:24

.50

2007

-09-

22T

05:3

4:24

.98

2007

-09-

22T

05:3

4:25

.46

2007

-09-

22T

05:3

4:25

.95

2007

-09-

22T

05:3

4:26

.43

2007

-09-

22T

05:3

4:26

.92

2007

-09-

22T

05:3

4:27

.41

2007

-09-

22T

05:3

4:27

.90

2007

-09-

22T

05:3

4:28

.38

2007

-09-

22T

05:3

4:28

.87

2007

-09-

22T

05:3

4:29

.35

2007

-09-

22T

05:3

4:29

.84

2007

-09-

22T

05:3

4:30

.32

2007

-09-

22T

05:3

4:30

.80

2007

-09-

22T

05:3

4:31

.28

2007

-09-

22T

05:3

4:31

.77

2007

-09-

22T

05:3

4:32

.24

2007

-09-

22T

05:3

4:32

.72

2007

-09-

22T

05:3

4:33

.20

2007

-09-

22T

05:3

4:33

.68

2007

-09-

22T

05:3

4:34

.16

2007

-09-

22T

05:3

4:34

.63

2007

-09-

22T

05:3

4:35

.11

2007

-09-

22T

05:3

4:35

.59

2007

-09-

22T

05:3

4:36

.07

2007

-09-

22T

05:3

4:36

.54

2007

-09-

22T

05:3

4:37

.02

2007

-09-

22T

05:3

4:37

.50

2007

-09-

22T

05:3

4:37

.97

2007

-09-

22T

05:3

4:38

.45

2007

-09-

22T

05:3

4:38

.93

2007

-09-

22T

05:3

4:39

.41

2007

-09-

22T

05:3

4:39

.89

2007

-09-

22T

05:3

4:40

.36

2007

-09-

22T

05:3

4:40

.84

Time

Hz

Source: Energy Intellect

facilitating a more sustainable future

Innovative Technology Solutions

Source: Energy Intellect

facilitating a more sustainable future

Weather projective tool

Source: Met Service

facilitating a more sustainable future

Innovative In-House Developed Technology Solutions

► Redundant applications (like dispatch and price monitoring) are located on the Google Application Service

► Log-on to these applications is via the web browser on the iPhone or any other suitable mobile device

How price forecasts change

over time

facilitating a more sustainable future

Real-time Provider Metering

Source: Outpost Central Software

facilitating a more sustainable future

Sales Force Automation (CRM)

Source: Sugar Software

facilitating a more sustainable future

New Systems To Come

► Settlement and Billing (Gentrack)

► CIS (Gentrack)

► Meter Data Store (Gentrack)

► Automated Dispatch (Whispir)

► DSR SCADA (Vendor not selected)

► FLOWS API (Energy Intellect)

► SME-DRP – Phase 1 (CSIRO)