Electric power: Analysis of initiatives to lower peak demand

Report for esaa on five core initiatives to achieve savings


Demand for electricity in Australia is closely related to weather. At times of extreme weather (hot or cold) – such as might occur over only a few hours or days in each year – demand shoots up and significant additional capacity is required to ensure supply is uninterrupted. For most of the year this additional capacity is not needed, and the significant investment required to deliver it, is therefore extremely expensive; a cost which is factored into prices all year round.

Shaving even small amounts of demand off these peak days has the potential to save Australian electricity consumers hundreds of millions of dollars each year. This report by Deloitte for the Energy Supply Association of Australia (esaa) estimates that initiatives which lower peak demand could reduce the costs of electricity supply over the next decade, providing NPV gross benefits of between $1.2 billion and $4.6 billion.  The report presents the findings from analysis of five core initiatives:

  • Dynamic pricing – time of use and critical peak pricing and incentives
  • Direct load control of air conditioning and pool pumps
  • Vehicle to Grid (V2G) capability of Electric Vehicles and Plug-in Hybrid Electric Vehicles
  • Energy efficiency measures targeted at reducing the drivers of peak demand, including:
    • Air conditioner appliance efficiency standards
    • Improvements in building standards for retrofitting
  • Small scale solar generation.

It is noted that the net benefits actually realised by customers due to these initiatives will depend upon the additional cost incurred in achieving the benefits, the regulatory framework and the competitive nature of the wholesale and retail electricity markets.