Study by Transpower could lead to millions saved

MAJOR ELECTRICITY USERS' GROUP

Successful pilot study by Transpower could lead to millions of dollars savings to consumers

“The announcement today by Transpower of a successful Demand Side Participation trial held over winter 2007 in the upper South Island is good news for consumers,” said Ralph Matthes, Executive Director of the Major Electricity Users’ Group (MEUG).

“The trial was the first time ever in New Zealand that small non-grid connected consumers and local generation were called upon when transmission lines were becoming congested. Next winter the trial is progressing to a pilot study on a more formalized contractual basis. This will include incentives and also liabilities should the Demand Side Participation service provider fail to deliver contracted service levels to reduce load on transmission assets that may result in loss of supply or hardship to other consumers. The demand side participants who meet their undertakings to reduce load should receive payment on an agreed basis, not one set arbitrarily by Transpower. Eventually this will become a standard commercial option.

“By having an effective Demand Side Participation product to pay consumers to reduce demand and small local generators to increase supply:

 The timing of new transmission lines can be deferred as long as the savings in deferment are greater then the cost of the Demand Side Participation payments; and
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 When transmission is congested, generation also tends to be tight with resulting spikes in spot prices. Over time this leads to higher average retail electricity tariffs. Smoothing out the demand peaks will lower overall costs and therefore reduce the need for increases in delivered power prices for all classes of consumer.
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“These savings could potentially be several millions of dollars per year.

“One practical example of how a commercialised Demand Side Participation product will help the economy and consumers is the grid upgrade from Whakamaru to South Auckland. Consent applications are currently being considered by a Board of Inquiry for the controversial 400 kV sized line, which will initially be used at 220 kV for at least 20 years before being enlivened to 400 kV. Under some scenarios it may never be enlivened at the higher voltage. When the Electricity Commission considered and approved, subject to resource consents, the 400 kV sized line it didn’t sufficiently consider how a commercialised Demand Side Participation product might defer the timing of a new line and the size of the line to meet peak demand. If it had, then it’s likely the Commission would have accepted the submissions of many parties, including MEUG, that a 200 kV line was a better option,” concluded Mr Matthes.

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