DEMAND RESPONSE………WHAT IS IT?To help understand what Demand Response is, let me first explain Peak Demand, what it is and how it happens. The term Peak Demand refers to a point in time when demand for electricity out weighs the amount of power available. The problem for consumers is that if there is insufficient power available for the Peak Demand, then quite simply the power goes off. Whole suburbs, or in extreme cases, the entire state could go off. Until recent times the only way to avoid these events was to build generators that are hardly ever used and are only turned on for as little as 20 hours a year. This type of solution is what has driven electricity prices skywards.HOW DO WE STOP PEAK DEMAND?Apparently it’s simple, just turn things off! But it is not as simple as that. How do we, as consumers know when the grid is under stress? When is Peak Demand likely to occur? To know these things as a consumer of electricity is not possible. We rely on the powers that be to manage this. The Australian Energy Market Operator AEMO is this power. The AEMO are saying Demand Response is an increasingly common approach worldwide to alleviate Peak Demand. But what is Demand Response? What does it mean for the normal householder using the electricity?Under a Demand Response tariff, electricity users will be paid to reduce usage, during times of Peak Demand. When Peak events happen, the AEMO are predicting it will not be more than 10 times a year, for no more than four hours at a time. The AEMO is responsible for payment of incentives to reduce usage and to control when Demand Response events are required. Demand Response tariffs need to be implemented by Energy Retailers for households to sign up to. There would be significantly lower tariff charges to incentify more homes to jump on board.SO, WHAT IS HOLDING UP DEMAND RESPONSE TARIFFS?There is resistance in Australia, mainly due to large energy companies who build the big generation plants. These energy companies have a significant say in the policy debate. The Australian Energy Market Commission AEMC, who make up the rules for the electricity and gas markets, was appointed by federal and state governments five years ago to look at options. No surprise when little came from this. So far the Australian Renewable Energy Agency, (ARENA) have commissioned a trial program in some states to implement Demand Response as an option to combat Peak Demand. The problem is………………..With peak demand in Australia growing at a rate of around 7% per year. The fixation with building new infrastructures to meet our changing needs means:wasting billions of dollars developing new under utilised power stationsmultiplying our greenhouse gas emissionsfacing continuous energy price hikes for householders and businessesWith these facts in mind, Demand Response seems like the most effective way to combat the growing problem.See how Gswitch can help you reduce your Peak Demand and decrease your power bills in my next blog.