The Australian Renewable Energy Agency (ARENA) has opened a $22.5 million competitive funding round to drive innovation in demand response.

The pilot program is a joint initiative with the Australian Energy Market Operator (AEMO) which will seek to trial demand response in the National Electricity Market.

Through a competitive funding round, ARENA will provide up to $22.5 million in grants to trial demand response technologies and implementation models over three years.

There is also the potential for the pilot program to be scaled up and expanded with funding from state governments.

The initiative will provide approximately 100 megawatts of capacity which can be called upon during grid emergencies and extreme peak demand days, to avoid involuntary load shedding.

Demand response involves paying energy users – including both commercial, industrial and residential consumers – to reduce their energy consumption, free up stored supply or switch to distributed generation, when reserve capacity falls to critically low levels.

The funding round will be open to a wide range of demand response technologies and methods, from demand response aggregators, smart thermostats and battery storage to behavioural demand response projects.

ARENA funding will provide grants to fund technology for energy users to become demand response-enabled, including metering, monitoring, storage and distributed generation equipment and other set up costs.

If demand response providers are activated, AEMO will also pay for usage through its existing Short Notice Reliability and Emergency Reserve Trader (RERT) scheme.

ARENA Chief Executive Officer, Ivor Frischknecht, said ARENA’s funding would help to bridge the gap between innovation and commercialisation in demand response, and would support grid security and stability needed to enable more renewable energy.

“Flexible and responsive demand side resources are important as we transition to an electricity system powered by more variable renewable energy, such as wind and solar,” Mr Frischknecht said.

“With this pilot program, we want to find smarter, more affordable and more efficient ways of managing peaks in demand, relying less on fossil fuel generation we only need a few days a year.

“A well-designed demand response program can make better use of our existing electricity infrastructure, reduce energy costs for consumers and reduce emissions.”

The pilot program will provide a contingency for extreme hot days and unplanned outages.

“This pilot program will allow us to manage demand in real time, and provides us with a safety net in case of emergencies,” Mr Frischknecht said.

“From Texas to Taiwan, demand response programs have been proven to be a cost-effective, common sense way of managing peak demand. We hope this pilot will inform and lead to future reform.”.

The demand response pilot is the first proof of concept initiative jointly developed by ARENA and AEMO under their Memorandum of Understanding signed in May 2017.

Applications for funding, close 10 July 2017. (

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