Demand response under the spotlight


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In today's edition:

  • WDRM up for review
  • Green hydrogen back on
  • Underwriting offshore wind

Demand response is having a moment

Later this week, the Australian Energy Market Commission (AEMC) will report on the effectiveness of the Wholesale Demand Response Mechanism (WDRM).

Launched in October 2021 to allow third party demand response aggregators to compete with big energy companies in the NEM, its early results were underwhelming.

The big gentailers have been cheering for its demise, but a recent doubling of capacity could be reason for pause.

Demand response involves turning down clients’ power use during heatwave or cold snap-induced supply squeezes and being paid the spot price, which is typically high at these times, for the energy they save. It helps achieve climate targets by replacing coal and gas in the grid when wind and solar are low.

Carl Hutchinson, Asia Pacific head of operations at virtual power plant (VPP) proponent Enel X, expects the company’s WDRM arsenal to jump to 300MW later this year, thanks to a 95MW VPP deal with the NSW government and AEMO’s efforts to flex strict baselines for measuring energy savings.

The AEMC is mulling whether the mechanism should be changed, remain or be phased out. AGL Energy (ASX: AGL), Origin Energy (ASX: ORG) and EnergyAustralia, whose generators and VPPs compete with the WDRM, argue it should be shut or wound down so a “two-sided” market they say will do a better job can emerge.

Green hydrogen is back on

A major green hydrogen project secured federal backing days after one of the biggest proposals to produce the feedstock for alternative fuels and fertilisers fell over in Queensland. (ABC) (AAP) (AFR)

"It's in the hard basket, not the too hard basket … Australia is one of the few countries in the world that has the capacity to develop a green hydrogen industry big enough for export.” - Energy Minister Chris Bowen

Explosives giant Orica (ASX: ORI) will receive up to $432 million in grant funding from the Australian Renewable Energy Agency (ARENA) for the Hunter Valley Hydrogen Hub, which will produce renewable hydrogen using a 50MW electrolyser powered by renewable electricity. This hydrogen will replace gas in the ammonia production process, helping to reduce greenhouse gas emissions.

“It’s going to be a hard road … We will need a lot of support from the local authorities, from the state government, from the federal government and obviously from the Orica workforce. There’s a lot of competence here. There’s a lot of knowledge here. We’ve been doing what we do for the last 50-plus years, and the expectation is that we are setting up this particular site, Kooragang Island, for the next 50 to 100 years.” - Orica CEO Sanjeev Gandhi

The funding announcement comes months after Origin Energy pulled out of the Orica project, citing high input costs and market uncertainty around demand. The project is the second recipient under the Hydrogen Headstart program, after $814 million was allocated to Copenhagen Infrastructure Partners’ 1,500MW Murchison Green Hydrogen Project in WA.

Consultation for Round 2 of Hydrogen Headstart is now open.

Underwriting offshore wind

The federal government will examine funding support for offshore wind through the National Electricity Market (NEM) review amid industry fears that a lack of financial support could see more proponents walk away.

“The government is committed to working with the Victorian government to progress an offshore wind industry that will deliver regional jobs and lasting energy security for Australia,” a federal government spokesman told The Energy.

Victoria’s Energy Minister Lily D’Ambrosio has publicly backed a deadline of September, the AFR reported, when Victoria plans to conduct Australia’s first offshore wind auction, which will allow project developers in the Gippsland zone to bid for underwriting support.

Proponents will be supported through a contract-for-difference and availability payment – the CfD will provide investment certainty for proponents while the availability payment will only be made once infrastructure is generating electricity, providing energy security.

Catch up

Capital

Road fleet electrification will be crucial for achieving national emissions reduction targets, sparking an investment of $6 million by the Clean Energy Finance Corporation (CEFC) in Battery Electric Trucks (BETs). Global electric fleet specialist Zenobē and its electric vehicle as a service (EVaaS) model will be used to deploy BETs and charging infrastructure for Woolworths (ASX: WOW).

“Investing in Zenobē’s shared infrastructure model will allow major logistics and freight operators and users to transition to electric vehicles (EVs) without the significant capital expenditure and complexity associated with the uptake of BETs. It is essential to address the finance gap present in electrification of heavy fleet transport to accelerate the decarbonisation requirements within the sector. - CEFC Head of Infrastructure Julia Hinwood

Projects

Victoria approved Spanish-owned GPG’s $190 million Battery Energy Storage System (BESS) project in Tarrone under the Development Facilitation Program, after consultation with residents, the Country Fire Authority, Ausnet, Worksafe, and Moyne Shire Council. Prior to this fast-track pathway, more than one in five renewable energy project applications ended up mired in the Victorian Civil and Administrative Tribunal (VCAT) - delaying eventually successful projects by years.

CIMIC Group’s infrastructure construction contractor CPB released a Sustainable Construction Playbook to get subcontractors and suppliers on board with the decarb agenda. A fitting example of collaboration was a hybrid power system at a worksite in Aldinga, South Australia, which has a 20kW solar array and on-site battery, reducing the use of diesel at the road duplication project, according to Group Manager - Sustainability David Fox.


Policy

WA Energy Minister Amber-Jade Sanderson warned federal Environment Minister Murray Watt against any environment law reform that would stymie future transmission and energy infrastructure projects. “If we are serious about supporting heavy industry to rapidly decarbonise, we need a structure that enables renewable generation and transmission projects to be delivered quickly,” she said. (AFR)

The UK government launched its first onshore wind strategy to reverse almost a decade of the sector’s stagnation. Ending a nine-year de facto ban in England and aiming to add 29GW by 2030, onshore wind will be added to the Nationally Significant Infrastructure Projects regime, putting it on an equal footing with offshore wind and nuclear. Some 10GW of the onshore wind project pipeline had faced objections on the grounds of interference with aviation and defence assets, which the strategy promises to “resolve”.

“Proposals to resolve challenges around aviation infrastructure and to give local planning teams the tools and information they need to make faster, evidence-based decisions are especially important. The socio-economic contribution made by renewables developers means communities also benefit from significant benefit packages that reflect local priorities. This flexibility should be maintained for future developments. Further investment can also be encouraged by ruling out zonal pricing, which risks creating further imbalances in consumer bills.” -Vattenfall Head of UK Regulatory Affairs and member of the Onshore Wind Taskforce Lisa Christie

Regulation

CAM Engineering was ordered by the Federal Court to pay a penalty of $250,000 for breaching the National Energy Retail Law by failing to join the Energy & Water Ombudsman NSW (EWON) scheme, which denied vulnerable consumers access to dispute resolution.

“In circumstances where I have found that CAM’s conduct, persisting as it did over a period of 16 months, was at least reckless, if not deliberate… a penalty of some magnitude is warranted to deter other operators of retirement villages from ignoring their legal and regulatory obligations.” - Justice Sarah Derrington

Technology

A New Zealand company at the cutting edge of marine electric propulsion has been chosen to deliver Samoa’s first low-carbon vessels under a United Nations program. Whangarei-based McKay will design and manufacture five solar and battery-propelled electric catamarans under the Climate Action Pathways for Island Transport initiative. (NZH) (EVWorld)


Climate

Hawaii’s Mauna Loa Observatory captured the reality of climate change. The US plans to shut it down. “We can’t solve the existential problem of climate change if we can’t track the changes. Losing Mauna Loa would be a huge loss to climate science. If it shuts, other observatories such as Australia’s Kennaook/Cape Grim will become even more vital,” UNSW researchers warn. (The Conversation)


People

Bernardo Rodriguez left JD Power to boost Wood Mackenzie energy data analytics as Chief Product & Technology Officer, effective July 7. He is based in the United States and will report to CEO Jason Liu.

The Australian Energy Regulator (AER) called for expressions of interest for people to join a panel of Eligible Experts for a Rate of Return Instrument (RORI) review, which occurs every four years.


Research

Scientists are working on an industry-based project to transform solar power in space with the help of lightweight cadmium telluride (CdTe) solar cells on ultra-thin glass. The European Space Agency predicts a leap from just 1MWp/year to 10GWp/year of space solar demand by 2035, driven by expansion of satellite constellations like SpaceX’s Starlink and the rise of space-based manufacturing, including semiconductors and fiber optics. (Interesting Engineering)


Random

A team of researchers published an anti-autocracy handbook to help scholars protect their work and personal safety while navigating the “global trend of democratic backsliding, particularly in the US”. (Inside Climate News)

What's on

July 9
National Press Club

Smart Energy Council CEO John Grimes will speak on “Power politics: The political power of Australia’s renewable energy industry” at this event in Canberra.


July 17
Battery Recycling and Manufacturing Summit

NSW Energy Minister Penny Sharpe, Battery Stewardship Council CEO Libby Chaplin, CSIRO Senior Principal Research Scientist Manufacturing Dr Adam Best, and Ecocycle CEO Doug Rowe are among the speakers at this Sydney event.


July 17-18
Carbon Capture APAC Summit

Chevron General Manager of Energy Transition David Fallon, Beach Energy CEO Brett Woods, CarbonNet Project Director Jane Burton, Geoscience Director of Offshore Energy Systems Merrie-Ellen Gunning are among speakers at this event in Melbourne.


July 17-18
Australia Wind Energy 2025

VicGrid CEO Alistair Parker, Siemens Gamesa Global CEO Vinod Philip, New.E co-lead Clare Larkin-Sykes, RWE Renewables CEO Australia Daniel Belton, Engie AU Chief Renewables Officer Laura Caspari, ACCIONA Energía Australia MD Brett Wickham and CEFC Director, Investments, Nick Hawke are among the line-up at this Melbourne event.


July 17-18
Connecting Hydrogen

Federal Assistant Minister for Energy Josh Wilson, WA Energy Minister Amber-Jade Sanderson, Chevron Australia GM Energy Transition David Fallon, ARENA Investment Director Alexandra McIntosh, Ampol CFO Greg Barnes, and Woodside Energy GM Carbon Capture and Storage Andrew Nicholls will speak at this event in Melbourne.


July 21
Safeguard Symposium

The Carbon Market Institute will host a discussion of market dynamics under the Safeguard Mechanism, finance and investment in ACCU supply, carbon price reform, and climate policy at this event in Sydney, which was rescheduled due to severe weather.


July 22
Smart Energy South Australia

Federal Energy Minister Chris Bowen will headline at the Smart Energy Council conference and expo in Adelaide.


July 29-30
Australian Clean Energy Summit (ACES) 2025

AEMO CEO Daniel Westerman, AEMC Chair Anna Collyer, Climate Change Authority Chair Matt Kean, AGL CEO Damien Nicks, Iberdrola Australia CEO Ross Rolfe and Squadron Energy CEO Rob Wheals are among the lineup at the Clean Energy Council’s flagship event in Sydney.


July 30
Australian Sustainable Finance Summit

Treasury Deputy Secretary Angelia Grant, Original Power Executive Director Karrina Nolan, and Australian Office of Financial Management CEO Anna Hughes are among the line-up at this Sydney event.

The Energy

The Energy is dedicated to covering the business of energy and in particular the people, capital, projects and emerging technology behind the energy transition.

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