Load shifting involves shifting energy consumption to another time period, typically when prices are lower. It can generate returns that may more than compensate for the costs of lost production, organisational training and administration of the demand-side response measures.
Load shifting can be achieved through rescheduling activities, switching off unnecessary equipment, switching to onsite generation or by building product inventory to enable parts of the plant to be switched off when wholesale prices are high. For example, a cement works might choose to store surplus stock, enabling them to continue production after turning off their crushers during peak periods.
Load shifting can help end users reduce their total demand charges, but may not necessarily reduce overall usage charges. Additional power is often required at other times to undertake the rescheduled processes or to return processes to the appropriate temperatures. However, end users can still benefit if they are able to shift their load during times of high wholesale spot prices, and capture the value.
Source: Marsden Jacob Associates' analysis (2011)
Capturing the benefits
Demand bidding provides an opportunity to capitalise on shifting load from a peak demand period, when wholesale market prices are high, to a time period when demand and wholesale market prices are lower.
The load you are willing to shed can be offered to the market through a demand-side aggregator or your energy retailer. A higher risk approach, but with potentially greater rewards, is to deal directly with a network service provider, wholesale energy markets or through financial contracts.
Demand-side aggregators pay for shed loads in a variety of ways. In all cases, there is an actual payment for the load that is shed; in some cases there may be a standby charge for being available and willing to shed load.
Industry Case Study – Amcor - Using demand side aggregators
Amcor has entered into an agreement with a demand-side aggregator which allows a significant financial benefit from reducing load, or running onsite backup generators for short periods of time.
Amcor uses their preferred demand-side aggregator to provide demand-side response services in South Australia, using 3 MW of back-up generation at their Gawler glass plant. The service provider combines individual items of Amcor’s capacity into a reliable portfolio and contracts with National Electricity Market participants for demand-side response services.
Amcor also uses their demand-side aggregator to provide demand side response services in Western Australia using approximately 1.7 MW of load that can be turned off at short notice. The demand-side aggregator aggregates Amcor’s capacity into a reliable portfolio and contracts for Reserve Capacity with the Western Australian Independent Market Operator through the Reserve Capacity Mechanism.
Amcor receives capacity (or ‘standby and availability’) payments from the demand-side aggregator for offering demand-side response capacity. Amcor also receives payments when responding to a ‘dispatch’ instruction from the demand-side aggregator.