Dr Ashok ManglickGroup Manager/Strategic Projects, TransGrid

Future Trends in Power SystemsA Short Course in honour of Professor David Hill

Monday 12 October 2009, University of Sydney

Non-Network Options and Demand Side Response for Network Support –

TransGrid’s Experience

Outline TNSPs and DSR

TransGrid’s Approach to Demand Response

Regulatory Framework for TNSPs

The Planning process

Case Study: Acquisition of 350MW of

network support for summer 2008/09

Future projects

Questions and Discussion

T1

Scale

0 100 km

Queensland

Victoria

CountryEnergy

Integral Energy

energyAustralia

New South Wales

A.C.T.

SnowyACTEW/

AGL

TransGrid’s Network

500 kV500 @ 330 330 kV220 kV132 kVDistributor BoundaryPower Station

Major Substation

TRANSGRID’S CUSTOMERS

Delta Electricity

TransGrid

Generation Transmission DistributionAuthorities

MacquarieGeneration

EraringEnergy

energyAustralia

IntegralEnergy

CountryEnergy

Consumers

ACTEW/AGL

Large IndustrialsSnowy

Other TNSPs

DSR for TNSPs

Eliciting demand side response in terms of reducing peak electricity demand, changing energy usage to other forms of energy sources and/or installing embedded generation to meet part customer peak electricity demand.

Common DSR/DSM Practices

Load control- shift load to off peak Embedded generation Interruptible loads Industrial co-generation Power factor correction Shift to alternative energy sources – wind, gas etc.

TransGrid’s Demand Side Initiatives

Exploring & contracting Non-Network Options, where prudent and efficient

International Participation: IEA and CIGRE (via C6 Australian Panel)

State wide Demand Management Participation

Working with all NSW Distributors on Innovation in Demand Management

Exploring Non-Network Options

Annual Planning Report “Needs Statement” for each constraint describing the

nature of constraints Request For Proposals or similar calls seeking market

input for non-network options to defer (or eliminate) proposed network augmentation

For major network augmentations TransGrid publishes:

Non-Network Alternatives Requests2000-2009

Western Area of NSW Mid-North Coast of NSW NSW Central Coast South West of NSW Far North Coast West & Central West NSW Newcastle-Sydney-Wollongong (N-S-W) area Inner Sydney Metro Area – work in progress

Regulatory Framework for TNSPs

The AER regulatory regime

The AER Revenue Cap Decision

The National Electricity Rules

TNSP’s Obligations in the NER

Applying Regulatory test which requires TNSPs to treat non-network alternatives on equal footing with network proposals

EfficiencyMust be economically more efficient than other options (Reg.

Test) Prudence

TransGrid has obligations to maintain supply reliability to its customers. Non-network alternatives must deliver same level of reliability as network alternatives

Also, non-network alternatives must be feasible (must have a proponent or a likely proponent, able to deliver when required)

Funding from Pass Through

A Network (Grid) Support Event is a material change in the cost (if any) of network support. Can apply for pass-through of the cost

Pass-Through Event must be prudent, efficient & have a financial impact on TransGrid during the Regulatory Control Period.

Pass-Through amount must be material.

Funding from Deferral of Capex

The non-network network support alternative must be cost-effective when compared with the most cost-effective network alternative

Cost of implementing non-network alternative must be less than the benefit from capex deferral related to the proposed network alternative

The Board expects a robust commercial analysis (as different from economic analysis) justifying non-network option including risk management.

The Planning Process

Integration of non-network alternatives in planning process

Seeking and evaluating non-network alternatives as part of the capex decision making process

Identification of needsND&RA

Operational issue

NPO

Asset Condition

NS, NPO

Load & Generation Scenarios

ND&RA

Network Adequacy

ND&RA

Connection Enquiries & Applications

ND&RA

Joint Planning

with DNSPsND&RA

Feasibility StudyCPD

Project Definition Report >$10m

ND&RA

Technical and commercial evaluation of non -network

alternatives ND&RA

Outline PlansND&RA

Funding approval for Construction

CPD, NS, NPO

Risk Assessment

All

Non-network alternatives including DSM and generation

(Request for Proposals if required) ND&RA

Annual Planning Report

Detailed Planning and Options Development

Project Scoping Reports for network alternatives

Option Assessment

ND&RA

ND&RA

Regulatory Consultation Application Notice

DSM/Generation negotiations

ND&RA ND&RA

ND&RA

ND&RA

Project Definition Report <$10m

ND&RA

ND&RA

Decision Gate 1

Decision Gate 2

Sign off to start Regulatory Consultation

ND&RA

Regulatory Consultation Final Report ND&RA

Decision to examine non -network alternatives ND&RA

Sign Non-networkAgreement(s)

Funding approval for contracted DSM /Generation

Network Support

ND NP G3 004

The Planning process

Identify network needs (outside scope of this procedure )

Publish needs document (e.g XX MW required at ‘y’ location on grid in YYYY

Review responses

Pursue non-network option ?NO

STOP

YES

Prepare and publish EOI or RFP

Analyse & evaluate responses to EOI or RFP (technical & commercial)

Undertake Regulatory Test(ND NP G2 003 NER ‘Planning

Consultation Process’ for details )

Option fails

STOP

Option passes

Detailed negotiations with proponents and execution of

NSA

Implement

Review on completion of NSA term

Non-network alternatives:The process

Case study:

Non-network alternatives to defer a 500kV transmission project upgrade

Network Supplying the

Newcastle/Sydney/Wollongong Area

Newcastle

Sydney W ollongong

Hunter Valley Power

Stations

NSW northern load

Power transfers to and from Queensland

Snow y Power Stations

Power transfers to and from Victoria

W estern Power

Stations

Southern load area

Central Coast Power

Stations

Sydney W ollongong

Overall System Limitations

Bayswater Liddell

Power flow to and from north

and

Mt P iper W allerawang

Marulan

Centra l Coast power stations

Multip le lines

330

500 kV construction operating at 330 kV

Line rating lim itation

Voltage control lim itation

Hunter Valley power stations

W estern power stations

Newcastle

Tom ago

G reater Sydney

South Coast Dapto

South west

500kV Western System Upgrade: Non-network Options

Needs Statement (350 MW for summer 2008/9): issued October 2005

RFP issued August 2006, closed Sep. 2006

Classified in portfolios the most cost effective offers, totalling 350 MW (effective)

500kV Western System Upgrade: Non-network Options (2)

Cost components: availability and despatch payments; Total cost of recommended portfolio : $21.9M;

availability & despatch about equal. Recommendations approved by the Board: June 2007 Pass-through approved by the AER, May 2008

Operating procedures & processes

Notification & dispatch procedures Communication protocols Performance verification & payment processes

500kV Western System Upgrade: Non-network Options (3)

Major issues with AER

Materiality

Efficiency

Reasonableness

Major issues for TNSPs

Risk of not being able to meet reliability obligations due to lower reliability of non-network alternatives and uncertain availability

Financial risks & funding

Operational risks o Embedded generatoro Large industrial loado Aggregator

Future DSR Projects

Sydney Metropolitan Development Deferral by one or two years

DM Innovation 2009-2014

Sydney inner metropolitan area system development

TransGrid & Energy Australia joint planning & development in the Sydney Inner Metropolitan;

Complex project – transmission lines (overhead and underground) and associated substation works

Need to identify deferrable portions of the project (e.g. Land acquisition generally cannot be deferred)

TransGrid/EnergyAustralia Sydney Supply Areawhere DM needs to be implemented to defer projects by one year, or two (subject to availabilityof DM capacity)

The AER has approved DM Innovation allowance to DNSPs in NSW & ACT

TransGrid received approval for DM innovation projects for the 2009-2014 regulatory control period

TransGrid proposes to work with the DNSPs and has signed MOUs with them

Implement lessons learnt from the DMPP and Other new initiatives in partnership with distributors in

NSW & ACT

Innovation Demand Management

2009-2014

Questions & Discussion