Managing the renewables load: why flexibility is the key

Australian homes are installing renewable energy at a faster rate than any country in the world and there’s much potential for businesses to follow their lead. With technologies enabling energy to be stored and used to match demand, there are significant opportunities for businesses to save money or earn energy market revenue. However, the incentive to adopt load flexibility just isn’t there.

Despite the variability of wind and solar supply, consumer energy demand has long been treated as ‘fixed’, but researchers from the UTS Institute for Sustainable Futures (ISF) have been examining the impact of balancing renewables supply and demand through load flexibility. The results show significant potential to decrease the energy costs of both business and the grid.

Managing the load

The program of research includes the recent Renewable Energy and Load Management (REALM) study, funded by the Australian Renewable Energy Agency and released in partnership with the Australian Alliance for Energy Productivity (A2EP). Some of the country’s biggest organisations – Schneider Electric, IKEA, Woolworths, NBN Co, Goodman Fielder, Teys and V&C Foods – participated in site feasibility studies to test the extent to which load flexibility, or a better match of supply and demand, would allow them to use more renewables onsite.

Dr Chris Briggs, ISF Research Principal, explains that the study focused on thermal storage capability.

“We wanted to understand the extent to which the participants could use it as a storage device to draw more solar onsite rather than exporting it,” he says.

Dr Briggs cites the example of IKEA Tempe in Sydney, which has a 1.8 megalitre onsite cold water tank used for its air-conditioning.  

“It effectively works as a big battery,” says Dr Briggs. “They suck electricity in to chill it and then release it when they need to use air conditioning, but this hasn’t been done with regard to the timing of when they actually use the electricity. And this is largely because the price incentive for them to do so doesn’t really exist.”

Benefits of flexibility

The REALM study found that all participating businesses had potential to use existing onsite resources as a cheap way of increasing storage. However, Dani Alexander, ISF Research Principal, says current electricity supply agreements and tariffs provide little motivation for load flexibility.

 “The pricing or incentives are not there for businesses to change the way they use energy to create benefits in the grid,” she says. “The signal for them to activate load flexibility is just not very strong.”  

The study also found that few businesses understand the opportunities for demand flexibility and that suppliers and aggregators have a vital role to play role in developing business and market capacity as well as the commercialisation of demand-side technologies.

It also found that energy market reform, such as allowing for bidding into wholesale markets, could open up revenue streams for demand flexibility.

 “The important point is that, as we get more and more variable supply from solar and wind, we've treated demand as a fixed constant. But if we’re going to do this in a way that's low cost and maintains the security of the system, we also need to increase flexibility on the demand side,” says Dr Briggs.

The important point is that, as we get more and more variable supply from solar and wind, we've treated demand as a fixed constant. But if we’re going to do this in a way that's low cost and maintains the security of the system, we also need to increase flexibility on the demand side.

— Chris Briggs, Institute for Sustainable Futures

Pricing potential

Incentives to change commercial consumption of renewables may be on the agenda in places such as Victoria. The State Government recently commissioned ISF to complete a feasibility study as part of its Solar Optimisation Upgrades (SOUs) evaluation to reduce grid electricity demand across the commercial and industrial sector.

ISF analysed the impact of flexible loading across Victorian businesses and found significant potential for SOUs to reduce grid electricity consumption.

“The Victorian Government is looking at incentivising businesses to use more of their solar onsite,” says Dani Alexander. “The logic behind it is that the less solar that’s injected into the grid from the sites themselves, the easier it will be to manage the grid and the lower the costs will be for everyone. The benefit for the customers is that they reduce their own bills because they’ve already paid for the solar panels, so they’re just using free energy.”

While the SOU study examined load flexibility for onsite clean energy, ISF has also studied the benefits it can bring for offsite renewables in its recent Best of Both Worlds study, which was commissioned by energy retailer Flow Power.

We can see that load flexibility and PPAs are complementary. Customers are seeing benefits not only financially, but they are also able to use more renewables and potentially reduce business continuity risk.

— Dani Alexander, Institute for Sustainable Futures

Flow Power recently introduced power-purchase agreements (PPAs) to allow businesses to  buy energy from renewable projects at lower costs over a long-term period. It commissioned ISF and WWF-Australia to analyse the energy consumption profiles of three Victorian-based customers to determine whether PPAs could deliver further cost savings when combined with demand response energy management.

“The Flow Power model is around wholesale price exposure and the really interesting thing that we found is that customers tend to start with them on a pretty low-risk option but then, as they become more comfortable with changing their processes or using some of their thermal storage, they are increasing their load flexibility over time,” says Alexander. “We can see that load flexibility and PPAs are complementary. Customers are seeing benefits not only financially, but they are also able to use more renewables and potentially reduce business continuity risk.”

ISF is continuing its research with Flow Power to quantify the benefits of load flexibility and PPAs. And, based on the results of the REALM pilot, ISF and A2EP are working on a larger-scale pilot with network companies and retailers.

Alexander sees potential for load flexibility to address solar surplus beyond commercial sites.

“This requires thinking about flexibility within a site's energy system, but also the energy system as a whole,” she says. “How can a business’s energy-use best match future generation, whether it's onsite renewables, energy storage or offsite renewables? We’re interested in looking at the whole interface between renewables and load flexibility.”

Explore Energy