LARGE electricity users have been paid to cut their power use under a Wholesale Demand Response mechanism "for the first time in the National Electricity Market", a new report by the Australian Energy Market Operator (AEMO) has confirmed.
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Most of the commentary on the report - including that by AEMO - has concentrated on rising wholesale power prices, blamed on increased demand, coal-power outages and high coal prices.
But AEMO executive Violette Mouchaileh said that "for the first time in the NEM, WDR capacity was dispatched as Victorian and South Australian afternoon spot prices spiked to high levels in January".
"WDR enables large commercial and industrial businesses to participate in the spot market by committing to lower usage, assisting power system security and reliability, including peak demand days and periods of high wholesale electricity prices, and increasing competition with potential flow-on price benefits to consumers," Ms Mouchaileh said.
She said WDR began in October last year, with 58 megawatts of "registered capacity".
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Power industry veteran Steve Saladine, speaking as a fellow of the International Society of Engineering Asset Management, said WDR aimed to stabilise the grid - and power prices - by reducing demand instead of increasing output.
He said when coal and Snowy Hydro dominated, there was sufficient reserve capacity to bring more units on line to keep prices in check.
Now, cheap daytime solar often forced coal-fired power into running at negative prices, so when the chance came to lift their returns they took them, especially in Queensland and Victoria, where capacity was short at present.
Newcastle businessman Robert Monteath, who writes regularly on power in the Newcastle Herald's opinion pages, said the need for demand management showed the system could not produce the power it needed to.
He said claims of record renewable generation needed to be seen alongside almost daily situations when fossil fuels supplied 90 per cent or more of grid power.
Countries were finding they could not do without coal, and increased demand had meant big price rises.
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Ian Kirkwood
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
