In a report released this week, the Energy Efficiency and Conservation Authority (EECA) said there is huge potential to make use of existing power infrastructure by encouraging off-peak power use, smoothing out the demand for electricity.
Lowering the peak demand on the network would reduce the need to build as much new infrastructure to meet electricity needs at peak times.
With electricity network upgrades expected to cost tens of billions of dollars, this makes sense.
EECA chief executive Dr Marcos Pelenur says reducing this cost to build the network should flow through to lower costs to electricity users.
It seems crazy to have a system which, in the words of Auckland University department of economics senior lecturer Dr Le Wen, mirrors an overbuilt motorway designed to accommodate only a few rush-hour surges.
"Its extra lanes sit largely unused for most of the day, yet the massive investment behind them creates a silent markup on everyone’s electricity bill."
The analysis undertaken for the authority found up to a quarter of peak demand could be shifted to quieter times, often at a lower cost than alternatives such as boosting generation at peak times using gas and coal.
As Dr Pelenur pointed out, as well as easing pressure on wholesale gas prices, it would lower carbon dioxide emissions by shifting more electricity demand to when clean, low-cost wind and solar power was most plentiful.
The report said the largest potential for shifting use involved residential users in the main centres.
In some regions and industries, there was also potential for movement — areas such food processing in the Bay of Plenty, Waikato and North Canterbury, farming (irrigation related) in Canterbury and Waikato, the aluminium smelter and New Zealand Steel (although both have flexibility agreements in place), forestry in the Bay of Plenty, Manawatu/Whanganui, and offices in the main centres.
They referred to the lack of clear legislation and standardised contracts and called for industry collaboration and government incentives to better implement what is called demand-side flexibility (DSF) — the ability of electricity consumers to adjust their consumption patterns in response to external signals, such as price changes or grid conditions.
Also, while many industries might be willing to explore this, they considered the current structures often don’t provide sufficient economic incentives for DSF participation.
Among the suggestions from the report is a financial incentive scheme for industries which would compensate them for their participation, potentially including both direct payments and long-term energy cost reductions.
Dr Pelenur said some savings on household bills are available now by retrofitting home appliances such as heat pumps and hot water heaters with devices which optimise electricity use.
He describes them as low cost, but we wonder how you define low cost for people struggling to pay for the basics of living.
From the middle of this year the big electricity retailers will have to offer cheaper prices for off-peak power and fair prices to people selling surplus power to the grid from their solar panels at peak times.
This is encouraging but, as was reported last year, there was concern the ad hoc introduction of time-of-use plans could create undesirable peak demands in what was traditionally off-peak time.
Creating new peaks rather than smoothing the demand risks creating more problems.
There will have to be much more cohesion in planning around this if it is to be successful and of benefit to big and small electricity users alike.
It is hard to be optimistic about that in the current political climate.
