South Australian businesses in line to earn money by using backup generators for demand management or supply
Many businesses have back-up generators which sit idle most of the time. But there’s a way they can turn that lazy investment into steady revenue in a program backed by taxpayer dollars.
SA Business
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Businesses with their own electricity generators will be able to earn extra revenue under a project by energy management company Enel X.
The $4 million Backup Boost program will connect businesses so their generators can be used to assist grid supply or demand management.
There is significant latent capability in South Australia, which can be captured relatively quickly to address system security, reliability and affordability, said Jeff Renaud, head of Asia Pacific at Enel X.
“Participating businesses will use their backup generator as a flexible asset in the energy market,” he said.
“Increasing use of these assets – which can lay idle – means better use of capital.
“Our focus is on generators which now sit behind the meter and how those generators can create value in the wholesale market and contribute to grid security.”
The project funding – $2 million each from the State Government and Enel X – will go toward physical and software requirements to connect businesses.
Energy and Mining Dan van Holst Pellekaan said the initiative would benefit participating businesses and the broader system.
“Enabling local businesses to fire up their backup generators and supply the electricity market will add a revenue stream for the businesses and deliver lower prices for everyone else,” he said.
“The plan to utilise backup generation that are virtually idle mirrors the Marshall Government’s decision to allow the State Government’s 276MW of backup generation to operate in the electricity market.
“It is common sense to make use of resources that are currently under-utilised for the benefit of both the owners of the assets and the wider community”
Enel X will contract businesses on a case-by-case basis but revenue can be earned through a regular availability payment and through a tariff system when the business either generates power into the grid or withdraws some demand by firing up the generator for its own on-site usage.
“Demand reduction is simpler,” Mr Renaud said.
“But in some cases it will be worth the effort to pursue the network approvals for grid export.”
Enel X aims to sign up 40 to 50 businesses to deliver 20MW of capability.
Businesses with generators at 250kVA or above would be suitable but Enel X expects most to be about 500kVA.
Once the program is installed, Enel X will be able to remotely access a business’ generator with the aim of seamlessly managing use to ensure on-site activity – such as a manufacturing line – is not disrupted. It would only access the generator when wholesale prices spiked higher or there were grid security issues.
Enel X is headquartered in Rome and has been operating in Australia since 2004.
In Victoria this summer it has twice provided services which restored the grid when there were major trips – including the Victoria-NSW interconnector.
Mr Renaud said Enel X sells its services to the Australian Energy Market Operator and to retailers.
“(For retailers) we provide a physical alternative to financial hedging,” he said.
“Retailers obviously have to hedge against those extremely high prices or they’d go out of business.
“Typically they buy financial derivatives as an insurance policy.
“We can provide a physical insurance policy to retailers which says we have these megawatts available when high-price events occur.
“That protects them, gives us a revenue stream which we can share with the businesses – and a physical resource is better than a financial resource because a financial derivative doesn’t actually reduce the pressure on the system, it just protects them financially.”