power companies could remotely turn down your appliances in exchange for cash

Power companies would remotely turn down home airconditioners and swimming pool pumps to cut power use on hot summer days in exchange for cash rewards for consumers, under a plan by Australia’s energy watchdog.

The Australian Energy Regulator wants power utilities to increase electricity supply by helping consumers use less, rather than building expensive new poles, wires and other infrastructure and passing the cost on to customers.

Turnbull pushes energy companies on price

Electricity companies will write to a million households by Christmas to offer them cheaper power plans, Prime Minister Malcolm Turnbull demanded.

Amid soaring power bills, rising greenhouse gas emissions and the risk of blackouts, the regulator this week released a draft plan to give incentives to electricity distributors who manage the power use of consumers.

As well as saving customers money, experts say so-called “demand management” could deliver far more capacity than the Turnbull government’s proposed $2 billion Snowy Hydro expansion.

Chief Scientist Alan Finkel’s review of the national electricity market said “more attention should be paid” to how consumers were rewarded for managing their power demand.

Regulator board member Jim Cox said the plan encouraged power utilities and consumers to “try new and different things”.

“One of the purposes of the scheme is to get some ideas happening, because in the past the networks have simply wanted to build lines rather than manage demand,” he said.

One such idea is “direct load control”, in which consumers give their power utility permission to control their airconditioner at times of peak demand, in exchange for payment.

“[Power companies] may turn down your airconditioner just a little bit, but that does help to reduce the load across the network or in a particular part of the network,” Mr Cox said.

“People might feel that a small change in temperature at peak times is not something that they’d particularly notice, but if done on a large scale would help control demand and might lead to less investment and lower bills.”

Mr Cox said power-hungry swimming pool pumps could also be turned down remotely. Specially enabled appliances that communicate with power companies would be required.

Power companies already exploring such interventions include Queensland’s Energex, which offers cash rewards of up to $400 to homes and businesses that allow remote control of their airconditioners. When the network is under pressure, the appliance drops to a lower performance mode.

Research commissioned by the Australian Energy Market Commission in 2012 found peak demand reduction could save up to $11.8 billion in national electricity market costs over a decade, potentially cutting up to $500 off an annual household power bill.

UTS Institute for Sustainable Futures research director Chris Dunstan said while off-peak hot water tariffs had long been offered in Australia, nations such as the US had been quicker in adopting other demand-management tools.

He said if Australia matched the US average for managing peak electricity demand, it would deliver about 3000 megawatts of power into the national grid.

The Turnbull government’s Snowy 2.0 scheme will deliver an estimated 2000MW, while Victoria’s recently retired Hazelwood coal fired power station had a 1600MW capacity.

Mr Dunstan said demand management could also involve calling on consumers to run dishwashers and other appliances later at night, when power demand was lower, and encouraging the use of energy efficient devices.

“We’re seeing rising electricity charges, a shift away from coal-fired electricity to renewables, which means we need flexible resources, plus concern about climate change,” he said.

“Without doubt the cheapest, biggest and quickest flexible energy resource is demand management.”

Energy Consumers Australia chief executive Rosemary Sinclair said in the long term, effective demand management could reduce energy system costs, lower prices and “allow consumers to be equal participants in a much more dynamic and responsive market”.

A spokeswoman for Energy Networks Australia, the electricity and gas transmission peak body, said demand management was already in use, and the regulator’s draft scheme would help “promote innovation to benefit customers”.

Power by the numbers

  • $11.8 billion – the estimated cost savings to the national electricity market of reducing peak power demand, over the decade to 2022
  • $500 – the maximum potential reduction that would flow to annual household power bills
  • 3000MW – the amount of power that could be delivered to the national grid if Australia matched the US average for managing peak electricity demand
  • 2000MW – the energy potentially added to the Snowy Hydro scheme under the federal government’s proposed expansion

Sources: Australian Energy Regulator, Australian Energy Market Commission, UTS Institute for Sustainable Futures, federal government

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