Reducing electricity use in
Victoria through demand
management
Dr. Philip Wallis
Research Fellow, Uniwater
Akaash Sachdeva
Research Assistant, MSI
MSI Collaborative Project
• Water, energy and
transport
• Infrastructure 21 Summit
(Brisbane, October 2008)
• Working group on
efficiency and demand
management
Full report at:
www.ausdavos.org
Index of per capita consumption (%)
Project Rationale
700
600
500
Electricity
Fuel
Population
Water
590%
Per capita
consumption
Indexed to 1961
400
300
217%
200
206%
100
73%
0
1960
1980
2000
Year
2020
Sources: ABS, ABARE and Melbourne Water
Electricity demand by end-use
Appliances
Demand Management in California
Per capita
Total
Sources: ABARE 2008, ABS 2008; Energy Information Administration (US), Annual Energy Review 2007
Objectives
• Helen Macpherson
Smith Funded
• Four Stages:
1.
2.
3.
4.
DM measures
Victorian context
Recommendations
Engagement
History of the situation
1921 – State Electricity Commission of Victoria
1982 – Reforms
1990 – Partial privatisation
1992 – Openly competitive market
1994 – Market unbundling
1998 – National Electricity Market (NEM)
2002 – Full retail competition
Industry structure
Loy Yang
Mgt. Co.
Snowy
Hydro
Hazelwood
Power
TRUenergy
IPM
Australia
2120 MW
1812 MW
1600 MW
1512 MW
1000 MW
Ecogen
Energy
AGL
Valley
Power
Pacific
Hydro
Energy
Brix Aust.
932 MW
855 MW
300 MW
216 MW
195 MW
Pyrenees
Wind
SECV
Aurora
Energy
Energy
Pacific
EDL Group
192 MW
150 MW
94 MW
48 MW
30 MW
Transmission
businesses
SP AusNet
(Network
owner)
AEMO
(Network
services)
Distribution
businesses
Powercor
SPI
Electricity
United
Energy
Jemena
Citipower
AGL
Australian
Power and
Gas
Click Energy
Country
Energy
Energy
Australia
Momentum
Energy
Neighbourhood Energy
Origin
Energy
Powerdirect
Red Energy
Simply
Energy
TRUenergy
Victoria
Electricity
Generators
in Victoria*
Retailers
Organisations
Generators
IPM
Australia
Hazelwood
Power
Loy Yang
TRUenergy
Mgt. Co.
Energy
Pacific
Pacific
Hydro
AGL
SECV
Powercor
SPI
Electricity
Snowy
Hydro
Valley
Power
Ecogen
Energy
Momentum
Energy
United
Energy
Australian
Competition
and Consumer
Commission
Federal
Treasury
Ministerial
Council
on Energy
Australian
Energy
Regulator
Department of
Climate Change
Energy
Australia
Country
Energy
Origin
Energy
AGL
Simply
Energy
Distribution
Federal
SP AusNet
Red
Energy
Aurora
Energy
Australian
Energy
Market
Operator
Transmission
Energy Brix
Aust.
Pyrenees
Wind
Citipower
Jemena
ELECTRICITY
INDUSTRY
EDL
Group
Local
Councils
Click
Energy
Australian
Power and Gas
COAG
Victorian
Department
of Primary
Industries
TRUenergy
Powerdirect
Neighbourhood Energy
GOVERNMENT
Australian
Energy
Market
Commission
Retailers
Victoria
Electricity
Energy and Water
Ombudsman
Victoria
Sustainability
Essential
Victoria
Services
Commission
Environmental
Protection
Energy Safe
Agency
Victoria
Project, programs and policies
ACTS, STRATEGIES & POLICIES
Victorian Energy
Efficiency Targets
Act 2007
Environment
Protection
Act 1970
State Electricity
Commission
Act 1958
Victorian
Climate Change
Green Paper
Renewable
Energy Act 2006
Sustainability
Victoria Act 2005
Electricity Industry
Act 2000
Electricity Safety
Act 1998
Energy Safe
Victoria
Act 2005
Victorian
Carbon Pollution
Reduction Scheme
National
Strategy on
Energy Efficiency
Australian Energy
Market Act 2004
Renewable Energy
(Electricity) Acts
National Greenhouse
and Energy
Reporting Act 2007
National Framework for
Energy Efficiency
Federal Energy
Efficiency Opportunities
Regulation 2006
Federal
Equipment Energy
Efficiency (E3) Program
Energy Efficient
Homes Package
Renewable
Energy Target
VEET
Scheme
Green
Loans
Federal
NEM
Australian
Carbon Trust
Energy Meter
Rollout
Climate
Communities
Solar Hot
Water Rebate
ResourceSmart
Gas Hot
Water Rebate
Victorian
Whitegoods
Appliance
Rebate
PROGRAMS & PROJECTS
Victorian electricity system
NON-ORGANISATIONS
ORGANISATIONS
Generators
Snowy
Hydro
IPM
Hazelwood
Australia
Energy Brix
Power
Valley
Aust.
Loy Yang
Power
TRUenergy
Mgt. Co.
Pyrenees
Wind
Ecogen
Energy
Pacific
Energy
Pacific
Hydro
Red
Aurora
AGL
Energy
SECV
Energy
Powercor
Momentum
Energy
Citipower
Jemena
SPI
Electricity
Simply
Energy
Distribution
Ministerial
Council
on Energy
Federal
Australian
Competition
and Consumer
Commission
Federal
Treasury
Australian
Energy
Regulator
Department of
Climate Change
Energy
Retailers
Association
of Australia
Energy
Supply
Association
of Australia
Australian
Energy
Market
Operator
Local
Councils
Industry
associations
Energy Users
Association
of Australia
Energy
Networks
Association
State Electricity
Commission
Act 1958
TRUenergy
Sustainability
Victoria Act 2005
COAG
Victorian
Victoria
Electricity
Carbon Pollution
Reduction Scheme
Consumer
Action
Law Centre
Financial and
Consumer
Rights Council
Victorian
Council of
Social Service
Energy Safe
Victoria
Act 2005
National
Strategy on
Energy Efficiency
Australian Energy
Market Act 2004
Renewable Energy
(Electricity) Acts
Equipment Energy
Efficiency (E3) Program
Energy Efficient
Homes Package
Alternative
Technology
Association
Central
Victorian
Greenhouse
Alliance
Municipal
Association
of Victoria
Beyond
Zero
Emissions
Environmental
Defenders
Office
Renewable
Energy Target
National Greenhouse
and Energy
Reporting Act 2007
National Framework for
Energy Efficiency
Federal Energy
Efficiency Opportunities
Regulation 2006
Federal
NEM
Australian
Carbon Trust
VEET
Scheme
Green
Loans
Federal
Energy Meter
Rollout
Climate
Communities
Solar Hot
Water Rebate
ResourceSmart
Gas Hot
Water Rebate
Victorian
Whitegoods
Appliance
Rebate
PROGRAMS & PROJECTS
SUPPORTING AND INTEREST GROUPS
Consumer
Utilities
Advocacy
Centre
Electricity Safety
Act 1998
Powerdirect
Energy and Water
Ombudsman
Victoria
Sustainability
Essential
Victoria
Services
Commission
Environmental
Protection
Energy Safe
Agency
Victoria
Consumer rights groups
Electricity Industry
Act 2000
Victorian
Neighbourhood Energy
Australian
Power and Gas
Department
of Primary
Industries
Renewable
Energy Act 2006
Environment
Protection
Act 1970
Retailers
Click
Energy
Country
Energy
GOVERNMENT
Australian
Energy
Market
Commission
Electrical
Energy Society
of Australia
SP AusNet
Energy
Australia
Victorian
Climate Change
Green Paper
Victorian Energy
Efficiency Targets
Act 2007
Transmission
Origin
Energy
AGL
United
Energy
ACTS, STRATEGIES & POLICIES
ELECTRICITY
INDUSTRY
EDL
Group
Environmental
groups
Zero
Emission
Network
Moreland
Energy
Foundation
Northern
Alliance for
Greenhouse
Action
Environment
Victoria
Demand Management Measures
STRATEGY
Pricing
Smart operating
systems
Regulation
Behaviour change
METHOD
Pricing structures
TECHNIQUE
Consumer incentives
Rebate schemes and subsidies
Energy saving certificates
Green loans
Peak-time rebates
Metering
Real-time electricity metering
In-Home displays
Direct load control
Power factor correction
Utility incentives
South Australia A/C load control trial
Efficiency
Mandated minimum efficiency standards
Voluntary efficiency standards
Influences on behaviour
The rational economic model of behaviour
Social-psychological factors and models
Strategies for behaviour change
Persuasion
Social learning theory
Participatory problem-solving
Community based social marketing
Consumer information
Appliance Labelling
Consumption information at billing
Time-of-use variable pricing
Real-time pricing
Pre-paid electricity
Critical-peak pricing
Rate decoupling
New South Wales D-Factor
Systems benefit charges
Shareholder incentives
Demand Bidding
Loading Order
$0 to $10
0%
Wholesale costs
8000
$300+
29%
$200 to $300
2%
40.63%
$10 to
$20
8%
$20 to $30
23%
Number of half hours
7000
$150 to
$200
1%
6000
26.12%
5000
4000
$100 to $ 150
2%
18.48%
$75 to $100
4%
3000
2000
1000
6.49%
1.38%
0
$0 to
$10
$50 to
$75 $40 to
$50
7%
8%
4.31%
1.48% 0.59%
0.08% 0.24% 0.20%
$10 to $20 to $30 to $40 to $50 to $75 to $100 to $150 to $200 to $300+
$20
$30
$40
$50
$75
$100 $ 150 $200 $300
Spot Price Range ($/MWH)
$30 to $40
16%
35
30
12:00 AM
40
11:00 PM
10:00 PM
9:00 PM
8:00 PM
7:00 PM
6:00 PM
5:00 PM
4:00 PM
3:00 PM
2:00 PM
1:00 PM
12:00 PM
11:00 AM
10:00 AM
9:00 AM
8:00 AM
7:00 AM
6:00 AM
5:00 AM
4:00 AM
3:00 AM
2:00 AM
1:00 AM
Retail electricity price / c/kWh
Pricing mechanisms
High demand day
Critical peak pricing
Time of use tariff
Real time pricing
Postage stamp tariff
25
20
15
10
5
35
12:00 AM
40
11:00 PM
10:00 PM
9:00 PM
8:00 PM
7:00 PM
6:00 PM
5:00 PM
4:00 PM
3:00 PM
2:00 PM
1:00 PM
12:00 PM
11:00 AM
10:00 AM
9:00 AM
8:00 AM
7:00 AM
6:00 AM
5:00 AM
4:00 AM
3:00 AM
2:00 AM
1:00 AM
Retail electricity price / c/kWh
Pricing mechanisms
Average demand day
Time of use tariff
Real time pricing
Postage stamp tariff
30
25
20
15
10
5
35
12:00 AM
40
11:00 PM
10:00 PM
9:00 PM
8:00 PM
7:00 PM
6:00 PM
5:00 PM
4:00 PM
3:00 PM
2:00 PM
1:00 PM
12:00 PM
11:00 AM
10:00 AM
9:00 AM
8:00 AM
7:00 AM
6:00 AM
5:00 AM
4:00 AM
3:00 AM
2:00 AM
1:00 AM
Retail electricity price / c/kWh
Pricing mechanisms
Low demand day
Time of use tariff
Real time pricing
Postage stamp tariff
30
25
20
15
10
5
Smart operating systems
Smart
Meters
In Home
Displays
Direct
Load
Control
Consumer incentives
Rebates
Green Loans
Energy Saving
Certificates
Efficiency standards
Voluntary
Standards
Improved
market
efficiency
Mandatory
Standards
Utility incentives
Barrier
Technique
Cost of
implementation
System Benefits
Charge
Lost revenue
Revenue
Decoupling
Management
motivation
Shareholder
Incentives
Behaviour change models
Social
Context
Economic
Rational model
Price
Information
Pricing & Smart
meters
Persuasion
campaigns
Internal
Values
Price &
Information
Subconscious
Habits
Behaviour
Change
Recommendations
Purpose
Target
Mechanism
Pricing
CONSUMERS:
Responsibility and
response-ability
Reducing
Electricity
Use
Recommendation
TIME-DEPENDENT
PRICING USING
SMART METERS
Purpose
Target
CONSUMERS:
Responsibility and
response-ability
Reducing
Electricity
Use
Mechanism
Recommendation
Pricing
TIME-DEPENDENT
PRICING USING
SMART METERS
Consumer attitudes
and awareness
COMPREHENSIVE
BEHAVIOUR CHANGE
STRATEGY
Purpose
Target
CONSUMERS:
Responsibility and
response-ability
Mechanism
Pricing
TIME-DEPENDENT
PRICING USING
SMART METERS
Consumer attitudes
and awareness
COMPREHENSIVE
BEHAVIOUR CHANGE
STRATEGY
Consumer access and
knowledge
Reducing
Electricity
Use
Recommendation
ENABLING
FRAMEWORK FOR
REDUCING
ELECTRICITY
DEMAND
(EFFICIENCY
SCHEMES)
Purpose
Target
CONSUMERS:
Responsibility and
response-ability
Mechanism
Pricing
TIME-DEPENDENT
PRICING USING
SMART METERS
Consumer attitudes
and awareness
COMPREHENSIVE
BEHAVIOUR CHANGE
STRATEGY
Consumer access and
knowledge
Reducing
Electricity
Use
Consumer access
BUSINESS:
Efficiency of equipment
and appliances
Recommendation
Regulation &
standards
ENABLING
FRAMEWORK FOR
REDUCING
ELECTRICITY
DEMAND
(EFFICIENCY
SCHEMES)
Purpose
Target
CONSUMERS:
Responsibility and
response-ability
Mechanism
Pricing
TIME-DEPENDENT
PRICING USING
SMART METERS
Consumer attitudes
and awareness
COMPREHENSIVE
BEHAVIOUR CHANGE
STRATEGY
Consumer access and
knowledge
Reducing
Electricity
Use
Consumer access
BUSINESS:
Efficiency of equipment
and appliances
ELECTRICITY
INDUSTRY:
Investment in
demand management
Recommendation
ENABLING
FRAMEWORK FOR
REDUCING
ELECTRICITY
DEMAND
(EFFICIENCY
SCHEMES)
Regulation &
standards
Organisational
attitudes and
incentives
INCENTIVES FOR
ELECTRICITY
INDUSTRY TO
PURSUE DEMAND
MANAGEMENT
Purpose
Target
CONSUMERS:
Responsibility and
response-ability
Mechanism
Pricing
TIME-DEPENDENT
PRICING USING
SMART METERS
Consumer attitudes
and awareness
COMPREHENSIVE
BEHAVIOUR CHANGE
STRATEGY
Consumer access and
knowledge
Reducing
Electricity
Use
Consumer access
BUSINESS:
Efficiency of equipment
and appliances
ELECTRICITY
INDUSTRY:
Recommendation
ENABLING
FRAMEWORK FOR
REDUCING
ELECTRICITY
DEMAND
(EFFICIENCY
SCHEMES)
Regulation &
standards
Organisational
attitudes and
incentives
INCENTIVES FOR
ELECTRICITY
INDUSTRY TO
PURSUE DEMAND
MANAGEMENT
Regulatory policy
EMBED
SUSTAINABILITY IN
REGULATORY
FRAMEWORK
Investment in
demand management
Acknowledgements
• John Langford (Uniwater)
• Janet Stanley, Anna Skarbek, Dave Griggs
(MSI, ClimateWorks)
• Graeme Hodge, Diana Bowman (Centre for
Regulatory Studies)
• CPUC, CUAC, ESC & others
• Helen Macpherson Smith Trust