facilitating a more sustainable future DSR Aggregation in Australia and New Zealand June 2010 Michael Zammit Managing Director

facilitating a more sustainable future What is DSR? ►An end user “Response” to: –Extreme wholesale electricity price –Peaks in Physical network demand –Reduced reliability or security of supply ►By: –Switching off discretionary loads –Delaying the use of equipment for a time until the peak has passed –Switching over their demand to an on-site generator –Switching over to an alternative fuel source –Combinations of the above ►Peaks usually appear for only a few hours a year (typically hours out of 8,760 hours per year) ie less than 0.1% of the year but cost the Australian economy over $A3bn annually

facilitating a more sustainable future Who is Energy Response? WA NEM NZEM ►Operating since December 2004 ►Australia and New Zealand’s most successful independent Demand Side Aggregator ►Currently operating in 3 significantly different electricity markets that broadly represent all major electricity market models ►Offices in Melbourne, Sydney, Perth and Wellington (New Zealand), with a total of 24 employees ►Sourced 1000’s MW of end consumers’ DSR capacity for market opportunities they cannot achieve on their own

facilitating a more sustainable future Effect of Demand Side Response Demand

facilitating a more sustainable future Retailers Generators Network Service Providers Financial & Market Physical Network CCCCCCCCCC Millions of electricity Customers Hedge contracts Independent Market Operator Disaggregated Market Model EnergyDollars

facilitating a more sustainable future Retailers Gens NSPs Financial & Market Physical Network CCCCCCCCCC Millions of electricity Customers Hedge contracts Energy Response DSM Facility IMO DSM Disaggregated Market Model Price Volatility Security Risk NW peaks

facilitating a more sustainable future Why End Users Participate 1.Economic Benefits ►Payment for participation, lowers cost of electricity 2.Advance warning of high price event or grid issue 3.Community Benefits ►Environmental –less CO2 emissions and water use ►Companies doing “the right thing” (like Earth Hour but companies get paid for participating) ►Raised awareness about energy use

facilitating a more sustainable future Typical Demand Side Participants ►Scrap Metal Merchants and Recyclers ►Manufacturers –MDF, Cardboard, Flour Mills, Wallboard, cables, etc ►Councils, Water Utilities, Treatment Plants ►City Buildings, Pubs and Clubs ►Many, many more ►Telcos and IT Data Centres ►Cool/Cold Stores ►Quarries, Mines and Sand Plants

facilitating a more sustainable future ER’s Core Offerings Matched to Markets Uses for Aggregated DSR Aust National Elec. Market WA MarketNZ Market Reserve Capacity (instead of Reserve Generation) Not quite right yet Commercial product Possible but not simple Frequency Control Rules are changing Being encouraged Commercial Product Network or Grid Support Contracts Commercial Product Showing interest Commercial Product Wholesale Price Hedging Achievable by ER process Not practical Gen-Ret vertically integrated Customer Owned Generation Achieved by ER process Showing interest WA NEM NZEM

facilitating a more sustainable future Over 400MW of Contracted Capacity Major Programme Energy Response’s Programs Reserve Capacity (instead of Reserve Generation) ►Reserve Capacity to NEMMCO in the NEM, 2006 ►Reserve Capacity via Synergy in WA, and ►Reserve Capacity to IMO in WA, 23MW 2010/11, 73MW from 2011/12- ►Broome Reserve Capacity to Horizon Power, 2009 Instantaneous Reserves ►New Zealand SIR market in 2008 – onwards ►New Zealand SIR market in 2010 – onwards Network or Grid Support Contracts ►TransGrid 2008/09 ►Integral Energy and Energy Australia ►TransPower (NZ) pilot 2007 & trial 2008 Wholesale Price Hedging ►NEM in 2004 (physical) – onwards ►NEM from onwards (financial) Customer Owned Generation ►First Generator of 2x1MW in the NEM registered in 2009 ►12MW now registered in May 2010 and another 40MW in the registration process WA NEM NZEM

facilitating a more sustainable future Projects and Programs Coming Up Major ProgrammeEnergy Response’s Likely Programs Reserve Capacity (instead of Reserve Generation) ►Register significantly more capacity in the WEM ►Capacity in the NEM (eventually when the rules are favourable) Network or Grid Support Contracts ►Network projects in the NEM (across 3 Australian states) ►Network projects in NZ ►Network projects in the WEM Instantaneous Reserves ►100MW in New Zealand by December 2010 ►Developing a Load Following product to match wind output Wholesale Price Hedging ►Expanding Physical and Financial Hedges in the NEM Customer Owned Generation ►Expanding Generation program in the NEM ►Investigating expansion of NEM program into WEM and NZ International Expansion ►Investigation of potential markets outside of Australia and New Zealand

facilitating a more sustainable future TECHNOLOGIES AND COMMUNICATIONS

facilitating a more sustainable future Frequency Control Technology Over 50 units installed and a further 300 units scheduled for installation by November 2010 to provide +100MW of curtailable load for frequency control

facilitating a more sustainable future Under Frequency Event Reporting Source: Energy Intellect

facilitating a more sustainable future Innovative Technology Solutions Source: Energy Intellect

facilitating a more sustainable future Weather projective tool Source: Met Service

facilitating a more sustainable future Innovative In-House Developed Technology Solutions ►Redundant applications (like dispatch and price monitoring) are located on the Google Application Service ►Log-on to these applications is via the web browser on the iPhone or any other suitable mobile device How price forecasts change over time

facilitating a more sustainable future Real-time Provider Metering Source: Outpost Central Software

facilitating a more sustainable future Sales Force Automation (CRM) Source: Sugar Software

facilitating a more sustainable future New Systems To Come ► Settlement and Billing (Gentrack) ► CIS (Gentrack) ► Meter Data Store (Gentrack) ► Automated Dispatch (Whispir) ► DSR SCADA (Vendor not selected) ► FLOWS API (Energy Intellect) ► SME-DRP – Phase 1 (CSIRO)