 | | You are here: Our Network > Demand Management > Demand Management ProcessEnergyAustralia's Demand Management Process |
|
This is a summarised version of the guidelines used by EnergyAustralia in investigating, developing and implementing network demand management projects.
Public Information
Demand and capacity forecasts for the supply system are developed through the planning process and detailed in the Annual Electricity System Development Review (AESDR), which is published with the Capital Works Plan.
The Capital Works Plan describes all significant capital works projects proposed for the next 10 years and provides information on network performance criteria and planning processes. It also includes summary planning information for all forecast network expansion requirements within the next 5 years.
EnergyAustralia maintains a DM Register of Interested Parties (DMRIP), who are notified of the publication of the AESDR as well as the release of DM public consultation papers and any other related reports.
Each year EnergyAustralia publishes an Electricity Network Performance Report, which provides information relating to DM Investigations and DM programs implemented in the previous 12 months.
DM Process Overview
The diagram below shows a simplified overview of EA’s DM process for a given network need.
Statement of Need and Network Options
Where forecasts indicate that a demand related issue is emerging that will require a solution, a Statement of Need and Network Options (SONANO) is prepared. This provides baseline information upon which the scope for non-network and demand side options can be determined. The content of the SONANO includes a description of the emerging issue, the default supply options to resolve it, and the decision date for the supply side investment.
The DM Screening Test
The Screening Test is the first step in the demand management investigation process. It consists of an analysis of the drivers behind the emerging issue, determination of the extent to which demand is driving investment (including the amount of investment that could be deferred) and the DM requirement to resolve the issue. A Screening Test is a desktop study and is carried out using current knowledge as early as possible in the planning process to allow sufficient time for the investigation and development of options.
Drivers usually include size (MVA), forecast year that the solution is required, season, time of day and duration, projected growth rates and predominant load type. Deferral options are modelled by postponing supply side investments and identifying the size of the necessary demand reduction to ensure relevant network performance criteria are still met.
The deferral value of the various scenarios is then established, based on the difference between the net present value (NPV) of the base case and that of the deferral scenarios, referenced to the investment decision date., of the base case and that of the deferral scenarios. Cashflows are expressed in real, pre-tax terms and the discount rate used is related to the weighted average cost of capital (WACC). Unless specific knowledge is available, annual operating costs are assumed to be 2% of capital cost.
Effective DM requirements are then characterised by the approximate size (MVA) relative to the existing load, target cost per kVA, time of day and season, and duration and frequency required.
A judgement is made about whether it is reasonable to expect that cost effective DM solutions exist. This is based on the DM requirement, and all available knowledge relating to our past experience with DM options, known customers in the target area, and the load characteristics., a judgement is made about whether it is reasonable to expect that cost effective DM solutions exist. Important considerations include: the amount of demand reduction required (especially in comparison with the current demand), the value of deferral, the complexity of the DM requirements, the time available for implementation, and the relationship between the timing of demand reductions needed and likely opportunities.
The Screening Test Report forms the basis for the decision on whether it is or is not reasonable to expect DM to be a cost effective option to defer or avoid a supply side investment, and if it should therefore be investigated further. This is an important step in the DM process as it enables investigation resources to be prioritised and allocated to those areas that have the most potential to present cost effective demand management options. If the Screening Test report recommends that a DM investigation is justified, then the investigation process outlined below is carried out.
DM Investigation
The purpose of the DM Investigation is to determine if there are cost effective DM options that could defer the supply side investment, and to identify the size, timing and budget costs of these feasible options. Based on the DM requirements identified in the Screening Test, the investigation stage identifies the range of possible DM options that might exist in the study area, and determines the approximate amount available and the likely net cost to EA of each of the identified options. Options are identified through EnergyAustralia’s existing knowledge, public consultation (via a Consultation Paper), field visits and discussions with specific customers.
The public consultation is focussed on identifying potential options and uncovering information that is already known (by another parties) but otherwise unavailable to EnergyAustralia. An Options Paper is normally publicly advertised seeking information from interested parties on DM options in the relevant geographical area. In parallel with the release of the Options Paper, field visits are conducted to the major customers within the constrained relevant supply area.
All options identified by public consultation and from other methods are summarised and analysed according to size (MVA), cost (both NPV and $/kVA), time of day, seasonality, timeframe for delivery, and reliability/risk. NPV cost estimates are calculated using the same discount rates and assumptions used in the Screening Test, referenced to the investment decision year.
Costs of the DM alternatives are compared to the value of deferring the network expansion option to establish the packages of DM options that can potentially be cost effective in deferring the proposed augmentation.
The DM Investigation Report describes the investigation process followed, identifies all DM options considered, lists the cost and impacts ascribed to each and describes any feasible DM options that are to be considered alongside network augmentation options. If necessary, it repeats the DM requirements and augmentation option details from the Screening Test Report with updates due to changes in load forecasts or the default supply side solution. It also provides a summary of the public consultation process and presents results of the comparison of cost to DM value.
The DM investigation is in effect a feasibility study and the accuracy of data and cost estimates is commensurate with this level of analysis. All options presented as feasible should be capable of development and implementation within the available timeframe. In the event that no DM options are found to be feasible then this is clearly stated.
Investigation reports are made public via the EA website, by direct contact to those parties that made submissions in the consultation, and notified to the DMRIP.
DM Project Development
If the DM option identified in the investigation is selected as the preferred solution, then an Instruction for Project Development (IPD) is issued. The project is then developed into a DM Project Offer, which consists of a business case and implementation plan with clearly defined deliverables in terms of demand reduction, timing and cost. The implementation strategy may include a range of procurement and project execution options depending on the DM options being sought.
DM Implementation
Once approved, implementation follows the approach outlined in the DM Project Offer. Standard project management procedures are used for the implementation of DM projects.
Review and Report
At the completion of implementation, the DM project is reviewed and a project close report prepared.
|
| |
