Rewarding and harnessing the collective power of customers

We recently launched the second year of AGL’s Peak Energy Rewards program - aimed at testing new ways to manage peak demand by harnessing the collective power of customers.

The Peak Energy Rewards program kicks in during periods of high demand. Offering a financial incentive for registered customers to elect to reduce their electricity consumption for short periods of time to collectively lessen the load on the grid.

How does it work?

During peak events, customers registered in the program will receive a text message asking them to voluntarily reduce their energy use for a two-hour period. If they elect to participate in this period, they’ll receive savings off their bill for every event - with six events expected for the 12-month program.

Empowering customers is at the heart of this program

Focusing on empowering customers to reduce their own energy consumption, Travis Hughes, Head of Market Development said the program centres around educating customers about how the small changes they make to their home energy use, can potentially have a big impact on energy reliability.

Discussing the program, Mr Hughes confirmed AGL’s Peak Energy Rewards program is part of the Australian Renewable Energy Agency (ARENA), the Australian Energy Market Operator (AEMO) and NSW Government partnership to find new ways to manage electricity supply during extreme peaks.

“We want customers to see how their small energy changes can, at scale, impact our community and grid stability. And at the same time, put some money in their back pocket.”

“We’ve launched a three-year program for both businesses and residential customers in NSW. The first year of our residential pilot was a smaller test of how we can appeal to customers and manage the peak events. This year is about how we can educate and create value for our customers.”

What problem does this initiative help solve?

Peak demand is when the electricity grid is experiencing unusually high demand. While this can occur at any time of year, it’s often the really hot days when households and businesses with air conditioning all switch them on at the same time, pushing demand or load on the system way above usual levels.

Additional power stations and electricity wires have traditionally been built to meet this higher level of demand, but these stations don’t need to produce this amount of electricity all the time. Many argue that it doesn’t make sense to keep building power stations that only get used for a few hours, every few years to meet peak demand.

And this is where demand response initiatives like ‘Peak Energy Rewards’ can contribute to giving the electricity grid a helping hand, by financially rewarding customers that choose to supply demand response to the market. The current Peak Energy Rewards program is for NSW only and we’ve reached capacity for the 2018/ 2019 period.

Snapshot - Implications of demand response
In the circumstances outlined above, everyone wins. Businesses and households supplying their demand response to the market are rewarded financially. Reliability is improved as there is less stress on the network. All users benefit from fewer costs being incurred to build infrastructure. This improves what economist’s term as ‘capacity utilisation’.

Snapshot - Implications of demand response

In the circumstances outlined above, everyone wins.

Businesses and households supplying their demand response to the market are rewarded financially.
Reliability is improved as there is less stress on the network.
All users benefit from fewer costs being incurred to build infrastructure. This improves what economist’s term as ‘capacity utilisation’.