Households Boost Demand with Free Power Offers
Many households in Australia are taking advantage of free three-hour power offers, particularly in regions governed by the Solar Sharer initiative, including South Australia, New South Wales, and Queensland, where the programme was launched in July. Additionally, Victoria has introduced its Midday Power Saver offer, starting just two weeks ago.
This surge in interest was confirmed by Daniel Westerman, the chief of the Australian Energy Market Operator (AEMO), during an energy conference in Sydney this week. He noted the significant increase in electricity demand observed at precisely 11am each day, stating, “Currently, that demand spike is about 360 megawatts (MW) across the National Electricity Market, and it has been steadily increasing over recent months.”
Market Trends in Free Power Usage
Westerman elaborated that this demand surge coincides with the initiation of free power periods offered under specific tariffs, suggesting that many households are now automating their energy usage for charging batteries, electric vehicles, and running appliances during these hours.
The notable achievements of Solar Sharer, which includes various default and retail offers, can also be attributed to the federal Labor’s Cheaper Home Batteries scheme. This initiative has successfully installed over 500,000 subsidised storage systems, positioning homes with these batteries as key players in the movement to store and utilise free power.
While exact figures remain elusive, Westerman estimates that roughly 15 to 25 per cent of home batteries are likely reacting to these market signals in differing capacities.
Insights from the Grattan Institute
Hamish McKenzie, the deputy director for climate and energy at the Grattan Institute, also investigated the Solar Sharer phenomenon, discovering even more surprising data. He noted that the demand increase visible on energy market dashboards at 11am varies significantly across different states and days. However, he observed that on most days, the trend is unmistakable, citing a clear spike in demand on August 28 in Victoria, where power usage surged by over 700 MW within half an hour of 11am, nearly double what Westerman had highlighted.
The timing of this spike is particularly noteworthy as it occurred prior to the official launch of Victoria’s default Midday Power Offer, which mandates retailers to provide an opt-in option for three hours of free power.
McKenzie suggests this could indicate either a pre-existing abundance of free power offers in the state prior to the new scheme’s launch or that other factors might be influencing demand. “Daniel Westerman suggested that batteries were being programmed to activate,” he remarked, “but I’m not entirely convinced that’s the sole reason.”
He argues that the spike could also be attributed to other appliances being turned on at that time, such as hot water systems or electric vehicles, showcasing a broader trend in market dynamics whereby consumers respond to energy cost signals. “This is a remarkable example of how the market can function effectively. Provide people with the right signals and make it convenient to engage, and they will,” he concluded.
