DSR Aggregation in Australia and New Zealand June

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 20 -50 hours out of 8, 760 hours per year) ie less than 0. 1% of the year but cost the Australian economy over $A 3 bn annually facilitating a more sustainable future

Who is Energy Response? WA M NE 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

Demand Effect of Demand Side Response facilitating a more sustainable future

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

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

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 CO 2 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 ► Telcos and IT Data Centres ► Cool/Cold Stores ► Quarries, Mines and Sand Plants facilitating a more sustainable future ► Many, many more

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

Over 400 MW 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, 2006 -07 and 2007 -08 ► Reserve Capacity to IMO in WA, 23 MW 2010/11, 73 MW 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 WA M Network or Grid Support Contracts ► Trans. Grid 2008/09 ► Integral Energy 2006 - and Energy Australia 2009► Trans. Power (NZ) pilot 2007 & trial 2008 Wholesale Price Hedging ►NEM in 2004 (physical) – onwards ►NEM from 2009 - onwards (financial) Customer Owned Generation ► First Generator of 2 x 1 MW in the NEM registered in 2009 ► 12 MW now registered in May 2010 and another 40 MW in the registration process facilitating a more sustainable future NE NZEM

Projects and Programs Coming Up Major Programme Energy 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 ► 100 MW 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 ► Investigation of potential markets outside of Australia and International New future facilitating a more sustainable Zealand Expansion

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 +100 MW 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 facilitating a more sustainable future Source: Met Service

Innovative In-House Developed Technology Solutions How price forecasts change over time ► 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 i. Phone or any other suitable mobile device 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) facilitating a more sustainable future