Transpower New Zealand Ltd The National Grid

A guide to what Demand Response is, why it is important, and how it works.

WHAT IS DEMAND RESPONSE?

Demand Response, or demand side participation, allows electricity consumers to respond to a signal from an organisation, like Transpower, to reduce their electricity demand for a period of time in exchange for a payment. It’s a win-win situation where consumers get compensated for their involvement and see lower charges long term, while helping Transpower manage demand on the grid.

WHY DEMAND RESPONSE?

Demand Response allows us to use technology to manage the grid, as demand increases. This will revolutionise how we manage the grid in the future and provide substantial benefits to our customers and therefore the end-consumer. The benefits include: Lower costs to all customers – Any reduction in peak

demand can result in reduced grid and generation investment. Less transmission and generation infrastructure means lower electricity costs.

Increased reliability of service – If we can switch off non- essential load in response to transmission or generation failures, we can maintain supply to customers’ essential services.

Reducing our carbon footprint – Continuing to ‘expand’ the current grid will substantially increase the footprint of the grid, which we would like to limit where possible.

Payment for participation – Those consumers who enrol in Demand Response will receive payment for participation.

This year, we will carry out a programme to see how consumers interact and participate in Demand Response using a new Demand Response management platform. This will be the first Demand Response management system in New Zealand.

We have some great examples of how other people and organisations have made the decision to participate in Demand Response on our website. There are also some case studies of how they’ve approached reducing their electricity usage. This is a great place to look to help you decide whether you would like to be involved.

DEMAND RESPONSE FACTSHEETHow can you

find out more?

VISIT OUR WEBSITE FOR MORE INFORMATION

www.transpower.co.nz

VISIT THE DEMAND RESPONSE ANIMATION ON OUR WEBSITE

www.transpower.co.nz/projects/demandresponse

CONTACT US

Quintin Tahau, Demand Response ManagerEmail: Quintin.Tahau@transpower.co.nz

©TRANSPOWER MARCH 2013 VERSION 1 WL 13986

HOW DEMAND RESPONSE WORKS

Finally, Transpower pays a delivery payment to each participant based on this metered information.

After each demand response event, each participant provides meter data to Transpower to verify how much demand was reduced in response to Transpower’s request. Each participant will have delivered a portion of the Demand Response which added up to 20 MW.

Demand Response can be used to reduce demand during the evening peak demand periods over winter (usually between 4–7pm).

Transpower has contracted with participants in that region to supply Demand Response.

These participants could include: • locallinescompanies• consumers(anyonewhouses

electricity such as a factory, cluster of commercial buildings, farms)

•independententitiesthatcombineanyof these and act as their agent.

This is how it works. When Transpower forecasts that demand will exceed its current asset capacity, it selects a number of participants (from a portfolio of registered consumers/companies) to match the 20 MW demand response requirement.

Transpower sends out a signal to the selected participants to notify them of a new Demand Response event. Each participant has a specific response requirement.

When it comes time to reduce demand, the participants will deliver their agreed response, which might include dimming lights, turning off their fridges or hot water for a period, reducing irrigation, and so on.

IT’S A WIN-WIN SITUATION FOR EVERYONE! Payment for participation Power savings from reduction of

power usage Deferral of investment in the grid =

lower electricity costs

1

2

3 4 5 6 7

8

THE FOLLOWING SCENARIO SHOWS HOW DEMAND RESPONSE WORKS

The situation Transpower forecasts that the network will need some new transformers in five years because

electricity demand in the region is predicted to grow substantially. Peak demand is expected to exceed the capacity of the existing equipment by approximately 20 MW.

Transpower can defer this investment if it reduces demand before the period that demand is expected to exceed the capacity of the assets. This is likely to occur during evenings on work days over the winter period.

$ $ $-6 MW -9 MW -5 MW

MW

240

220

200

180

160

140

120

100

20 MW

6am

7am

8am 9am

10am

11am

12pm 1pm

2pm

3pm

4pm

5pm

6pm

7pm

8pm

9pm

10pm

TIME