Energy customers paid for turning off power

Reducing your energy usage will always mean cheaper power bills, but for switched-on customers of one Victorian electricity retailer, turning off the lights and air conditioning has been resulting in even greater financial rewards.

Over recent weeks, Powershop has been inviting customers to register for its ‘Curb Your Power’ demand response program – an initiative to help reduce stress on the energy network at times of high electricity demand, while also potentially helping the retailer control costs by not having to purchase as much power during times when it becomes most expensive.

Electricity demand typically peaks in the early hours of the evening, with high temperatures often the cause of the greatest pressure as households turn on their air conditioners and other major appliances. When this happens, and a demand response ‘event’ is declared by the Australian Energy Market Operator (AEMO), Powershop alerts registered participants who are encouraged to safely reduce their energy usage, with the promise of a rebate on their next power bill, provided they meet a specific reduction target over a set period.

Households that meet their minimum target – a 10% reduction compared to typical usage or 1kWh – are rewarded with $10 power credit. Customers with solar will need to reduce their usage by 0.05 kW for each hour of the event to hit their target.

It’s thought that eight electricity retailers in Victoria are participating in the demand response program, with each setting their own specific conditions and rewards. Customers are warned of an upcoming event up to seven days ahead of time, with each event lasting no longer than four hours. Events will only occur Monday-Friday between 10am and 10pm.

The most recent demand response event was planned a couple of days in advance and lasted two hours. Powershop says it sent reminder messages to “tens of thousands” of subscribed participants an hour before the start of the event, which began at 5pm Melbourne time.

The retailer said that 55% of non-solar customers were successful in hitting their reduction target, cutting their energy usage almost in half, on average. A similar number of solar customers (54%) were also successful. The reduction in power usage during the event was said to be equivalent to the output of a big wind turbine.

Why is demand response important?

Electricity retailers purchase power from energy generators and the wholesale energy market, with this energy then sold on to you, the customer. At times of extremely high demand, the price that retailers need to pay can skyrocket. This is known as ‘spot pricing’ and can change every few minutes, depending on demand. This can put retailers in a position where they are selling power to their customers at a much lower price than they are paying for it. Therefore retailers are looking for ways to offset this potential loss – and encouraging customers not to use power is one of them.

In recent years, extreme demand has even resulted in energy blackouts across parts of Victoria and South Australia, when networks were simply not able to cope with the pressure. Demand response programs are designed to reduce pressure on the networks and make power supply more reliable. This is just one of many initiatives being implemented by the energy industry to reduce peak time energy usage, with time of use and demand tariffs also becoming more widely available.

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