The Australian Renewable Energy Agency (ARENA) recently released a report quantifying the value of demand flexibility in the energy transition. It found that flexible demand could avoid the need to invest in new generators and storage, reduce the use of expensive generation, and lower power prices.
So, what is flexible demand and how could it be an alternative to upgrading costly network infrastructure or building large-scale batteries?
Flexible demand explained
Flexible demand involves shifting energy usage both towards - when energy market prices are lower - or away from - when demand is peaking.
Electricity demand fluctuates on a daily cycle. This demand is constantly matched with a mixture of supply from renewable and fossil fuel sources.
But what if we could shift energy demand to periods when renewable energy is both cheap and plentiful?
Flexible demand can also involve demand response or the curbing of energy consumption during extreme peak periods such as a summer heatwave.
Businesses can sign up to reduce their energy consumption during these periods, thereby redirecting energy away from themselves when demand is peaking.
So, what would this actually look like in practice?
Demand flexibility offers a way to reduce the load on the grid during busy periods, reducing energy costs, lowering peak demand, and moving energy loads to where there are high amounts of renewable energy. It can be implemented in real-time in response to market signals, generation shortfalls, or network constraints.
Shopping centres, supermarkets, and refrigerated distribution centers have been identified as candidates for a demand response practice.
Together, they represent the largest medium-term opportunity for developing flexible demand capacity. They all carry large thermal energy loads with opportunities to manage heating and cooling. There’s also a strong retail industry push to move to sustainable outcomes where possible.
These places could build a whole-site solution to optimise the energy system including heating, ventilation, and air conditioning (HVAC), refrigeration, electric vehicle (EV) charging control, and onsite solar PV and storage.
Flexible demand can even be aggregated and controlled similar to batteries to respond to signals from the grid, so avoiding the need for more generation or more storage.
That would cut power bills for businesses, reduce energy waste, lessen demand for network upgrades and storage, and relieve pressure on the electricity network.
Can it be done?
There are a range of challenges that come with unlocking demand flexibility. Unlike power stations dedicated to generating electricity, demand flexibility revolves around how energy users change how and when they consume electricity.
When energy users are given clear incentives, market transparency, and intelligent tools to make demand flexibility efficient and simple, more people will participate and set the new standard for optimised energy use.
If consumers are empowered to engage with the demand side of the energy equation it will help accelerate the development of a reliable, robust, and renewable energy system.