One of my favourite movies as a kid was Dirty Dancing; I was energised by the music and dance. Now, when it comes to discussing our evolving energy systems and the need to transition to a net zero future, the dancing metaphor is a great fit. Here’s why.
The real-time balancing of electricity generation (supply) and demand is like a dynamic dance and if the two dancers are not in sync, the electricity system could tumble.
Demand has long been the leader, increasing when you flick on your kettle, and its dance partner, generation, follows its lead and increases too.
But the electricity system is transforming. Demand has suddenly flipped into an energetic tango, leaving the flowing waltz of the past behind.
Similarly, generation (supply) is no longer the perpetual follower of demand: grid-scale renewable generation output is growing rapidly. However, electricity generation from renewables is plentiful at times and sometimes it’s not dancing at all — when the sun doesn’t shine and the wind doesn’t blow — making balancing the electricity grid challenging.
Meanwhile, homes and businesses have become power generators in their own right, with rooftop solar, batteries and energy storage systems becoming more prevalent.
Keeping supply and demand moving in sync requires orchestration and incentives, as we transition to renewables and reduce emissions. Together, orchestration and incentives must overcome inconsistent generation and transmission challenges, and ensure increasing volumes of storage.
With storage, we have a new dance partner joining demand to spin around the dancefloor: when generation is resting, storage cuts in.
Importantly, we also need to teach demand to follow its generation partner’s lead every now and again. In the energy industry, we call this demand management, and this is the unsung hero and future of the grid.
To make demand management work, we need price signals to motivate changes to energy use by telling the market the true value or cost of each electron. In my Dirty Dancing analogy, this is like a conductor changing the beat, driving energy consumption to another time when energy is most available.
Due to supply and demand being out of step, an electron in the middle of the day can be far cheaper than an electron at 7:00 pm.
Today, many residential and small business consumers pay a flat rate regardless of supply scarcity. For larger energy consumers, pricing has been a little smarter, as most pay different rates for peak and off-peak and can therefore pay less by altering when they use energy.
High prices due to global energy supply shortages in the past couple of years have revealed the inadequacy of these old pricing regimes. When supply gets tight, the market operator must step in with expensive interventions to maintain reliability.
The future requires proactive mechanisms to better reflect scarcity and abundance. For example, it could be more cost-effective for a small manufacturer to have two production lines that run during daylight hours (powered by rooftop solar) than it is to have one production line that runs 24/7.
Most importantly, the consumer needs to be rewarded appropriately for helping to maintain grid reliability.
If you coordinate energy efficiency, demand response and demand management properly, you can realise significant value in that flexibility.
Today’s major energy consumers have multiple energy assets at their disposal — onsite generation, possibly onsite storage, and maybe untapped ability for demand management. As well as a retail electricity supply contract, they may also have renewable electricity contracts.
In recent years we’ve identified material savings for Schneider Electric’s industrial customers by finding the opportunities in all that complexity. It’s no easy task, but once done, consumers can plainly see the value of energy efficiency, demand management and demand response.
Load flexibility is a major asset to the grid of the future. As we upgrade our buildings, production facilities and homes, and add onsite solar or batteries, EV charging and smart technology, we need to think about improving our ability to flex our loads and encouraging changing consumption patterns.
Improving capability for flexing load also improves grid resilience. Of course, energy and decarbonisation are intrinsically linked, as the energy system is responsible for some 75% of Australia’s greenhouse gas emissions. Consumers big and small should think holistically about all the energy efficiency, electrification and energy management actions that are part of a wider aim to decarbonise.
We need to teach the steps through price signals, understanding value, understanding and improving demand management capability, and holistic thinking.
If demand is better managed, we can decarbonise and improve our grid much faster so that demand and generation can seamlessly dance in time across a decarbonised grid.
My hope is to see our grid be the first to achieve 24/7 carbon-free energy. It’s like the big lift in Dirty Dancing, a display of partners taking flight and moving in unison.