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SINGAPORE'S electricity sector took another step towards a future with a more balanced grid as Diamond Energy obtained approval from wholesale electricity market operator Energy Market Company (EMC) to manage demand response capacity.
The Energy Market Authority (EMA) had in 2016 introduced demand response to the energy market, but Diamond Energy is the first retailer to be registered for this in October(See amendment note).
Demand response allows consumers who have the freedom to choose their electricity retailers - also known as contestable consumers - to reduce their electricity consumption during peak consumption hours, in exchange for payment. These reductions could come from consumers with flexible production processes, chillers and pumps, or on-site back-up generation.
As a registered demand response retailer, Diamond Energy will be able to offer its clients' available flexible demand for curtailment at specific prices - similar to how generators offer their capacity to the market.
When EMC anticipates high spot prices, it will schedule the necessary capacity for curtailment and inform Diamond Energy. The group will then shift or reduce the power consumption of its clients that is flexible, according to the schedule given by EMC.
Subsequently, EMC will determine the overall savings that this produced for the market, and pay Diamond Energy a third of these savings.
A study by Frank Wolak, director of the energy and sustainable development programme at Stanford University, had found that every megawatt reduction of peak demand in Singapore could mean cost savings of about S$1.6 million, according to EMA. Besides this, shaving peak demand would make redundant some power plant investments as the need to build capacity to cater for peak demand is reduced.
EMC chief executive officer Toh Seong Wah said that EMC fully supports such demand side management programmes as they can help to lower electricity prices and improve system reliability. "Companies like Diamond Energy play an important role in the success of these programmes," he said in a statement.
"They drive the adoption of the programmes by creating awareness among electricity consumers, and offering innovative services and platforms for those who wish to participate. In the process, they also help to increase competition in the electricity market, and this can further drive prices down."
Diamond Energy has an initial capacity of 7.2MW registered with the National Electricity Market of Singapore. This is equivalent to removing demand of about 18,100 three-room HDB households from the grid, and is "a great start", said its president and chief executive Dallon Kay.
The firm has over 10 years of experience in providing interruptible load services in the electricity reserves market. It has also implemented demand response programmes in Ho Chi Minh city in Vietnam, and is planning to do the same in the emirate of Sharjah in the United Arab Emirates.
Amendment note: The piece has been updated to reflect that Diamond Energy successfully registered with the EMC for the demand response programme in October, and not on Dec 13.