Managing demand can save two power stations’ worth of energy at peak times


The management of Australia’s looming energy crisis has so far focused almost exclusively on the supply side of the equation: exploiting new gas reserves, expanding the Snowy Mountains hydro scheme, and building new infrastructure.

Meanwhile, the huge potential of improving efficiency and demand management, which could save vast amounts of energy, has largely been ignored.

One promising development is the recent announcement of a trial of demand response incentives in Victoria and South Australia.

Next summer, households and businesses who sign up for the trial will be paid when they agree to be on standby to reduce their energy use during times of increased peak demand or natural disaster. They’ll be paid again if their electricity is actually reduced.

ClimateWorks Australia’s research shows that initiatives to better manage energy use could reduce peak demand on the national grid by more than 10% – or 3.8 gigawatts – the output of two Hazelwood power stations over peak times.

Harnessing the huge demand-side opportunities is critical to addressing the “energy trilemma”: ensuring energy security and affordability, while reducing emissions.

Ensuring security

Adelaide Blackout
Adelaide CBD was left in total darkness after yet another blackout. David Mariuz/AAP

Our electricity market struggles to handle energy demand in times of extreme stress, as we saw in the recent South Australian and New South Wales heatwaves. And the Australian energy market operator has forecast little change in overall or peak electricity demand over the next few years.

Demand response measures can reduce blackouts by significantly easing peak demand on these extreme days. For example, companies could be incentivised to turn off non-essential power during peak periods, freeing up more electricity for households, hospitals and emergency services.

This already occurs in Western Australia, where the electricity market regulator operates a “capacity market” allowing businesses to be paid to reduce or shift their electricity use out of peak times.

ClimateWorks’ research into the industrial sector found that demand response measures could reduce commercial electricity demand on Australia’s east coast by as much as 42% during peak periods, which would reduce the overall peak demand by 10%.

Mechanisms to unlock this potential could improve Australia’s energy security considerably, while avoiding building costly infrastructure that may only be needed on a handful of days a year.

Energy affordability

At the same time, we also need to ramp up energy efficiency measures to reduce the cost of energy for households and business. ClimateWorks’ modelling, as part of the Pathways to Deep Decarbonisation in 2050 report, shows that Australia can potentially halve the amount of final energy it uses per dollar of GDP by 2050.

ClimateWorks Modelling

ClimateWorks modelling shows the cost of making houses more energy efficient is offset by the money saved on energy and transport. ClimateWorks Australia, Pathways to Deep Decarbonisation Report

We won’t see single new technology or policy acting as a silver bullet. Instead, there are many different ways to improve our energy efficiency. Our research shows if all these opportunities are pursued, household net energy costs could be decreased by around 15% by 2030 (after taking into account capital costs).

If we used these savings to offset the cost of decarbonising the electricity sector and transitioning away from gas, household energy bills would still be reduced by about 8% by 2030.

There are huge savings to be made in industry as well, especially as gas prices continue to rise. We’ve identified a broad range of cost-effective efficiency options, and calculated that companies most exposed to energy prices could improve their overall performance by at least 5% if they adopted best-practice energy improvements.

But many of these opportunities are unlikely to be taken up under current policy and market settings. Our research shows that in particular, companies face significant financial barriers, such as the payback period and the opportunity cost of the investment, or the availability of internal capital.

Electric vehicles, which use less energy than traditional petrol cars, are another key component of cheaper – and more secure – power. Research from CSIRO argues that increased uptake of electric vehicles, combined with a proactive development of charging infrastructure, could deliver energy system cost savings large enough to offset the cost of decarbonising Australia’s electricity generation.

Reducing emissions

Energy use accounts for more than 65% of Australia’s greenhouse gas emissions; reducing energy use is a vital aspect of achieving our emissions reduction goals.

Our research shows that pursuing multiple avenues to energy efficiency could diminish our emissions by 130 million tonnes of carbon dioxide equivalent by 2030.

That’s nearly half the reduction required to meet the government’s emissions reduction target, and one third of the reductions required to meet the Climate Change Authority’s recommended emissions trajectory.

On top of this, increased adoption of electric vehicles could deliver about 9 million tonnes of carbon dioxide equivalent of abatement by 2030, while better using our energy capacity. Finally, demand-side measures can also support increasing renewable energy, reducing emissions by an additional 125 million tonnes of carbon dioxide equivalent by 2030.

Policy makers need to ensure that the transformation of our energy system includes moving to renewable energy supply and managing demand.

If we improve energy efficiency, better manage commercial and domestic demand and actively encourage electric vehicles, we can avoid serious increases in energy prices, avoid building largely unproductive infrastructure and and address dangerous climate change.


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Understanding Batteries

Off-Grid Systems

For some households a battery system can be of great benefit and minimise a home’s reliance on the grid. However, it’s important to understand for a battery to be useful your solar system needs to be generating excess energy for the battery to store, which you can then use at night or when the sun is not out.

When selecting a battery, you’ll want to invest in a system that is most suited to your home and can drive the best return on investment (ROI). Despite a larger upfront cost, a higher quality battery may significantly increase your ROI.

    Battery systems start from $6,000 and costs can vary greatly based on the following factors:

  1. Cycle Life-Time

    The number of times a battery can fully charge and discharge.

  2. Battery Power (kW)

    How fast it can be charged or discharged.

  3. Storage Capacity (kWh)

    The maximum amount of energy a battery system can store.

  4. Battery Management System (BMS)

    An electronic ‘smart’ system that gathers data and manages the battery ensuring it does not overload or operate outside of its safe functioning zone..

  5. Inverter

    Battery systems require their own inverter if your solar system does not have a hybrid inverter.

  6. 'All-In-One Unit’

    A system which includes the battery, BMS and an inverter all in one unit.

  7. Warranty

    Length of time or cycles the battery system is under guarantee.

  8. Blackout Protection/Backup

    It’s important to note this is not a common feature of a battery system and could cost thousands of dollars to include. Blackout protection not only requires additional components but also a specialised installation and rewiring. For grid-connected homes, the cost for blackout protection can outweigh the benefit.

Additionally, if your purpose for adding battery is to go Off-Grid and become completely independent from the grid you will need to ensure your solar system can generate enough energy to power your home and your battery system is large enough to store this energy. For homes in metro areas going Off-grid is not cost effective and is only recommended for those in remote areas with limited access to the grid. Off-grid solar systems with battery start at approximately $30,000.

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