Eskom testing new plan to cut power demand from businesses and residential areas in South Africa

 ·5 Apr 2023

Embattled power utility Eskom says it is piloting a national demand response programme in the small commercial and residential sectors in response to the electricity crisis facing South Africa.

The programme is an expansion of the successful industrial Demand Response Programme, which has been operational for over ten years.

Demand response programmes are agreements between Eskom and participating power users which result in users getting compensation – such as favourable rates or discounts – in exchange for cutting power usage when contractually obligated to.

These times are determined by the system operator, and typically hit during peaks, or when unexpected or unplanned outages occur and demand needs to be reduced to stabilise the grid.

Eskom currently uses the system with industrial users where qualifying groups on the programme are contracted annually with Eskom (via an agreement).

Those contracted with Eskom on the programme currently receive a financial incentive based on actual performance and could potentially be excluded from national load shedding at stages 1 and 2.

This is often reported as load curtailment.

Eskom is now piloting this programme with smaller businesses and energy users, including in the residential sector.

According to the power utility, the objective of the pilot is to test, among others, the appropriateness of technologies, market uptake, and the implementation and participation in this sector.

“The pilot will enable Eskom to evaluate projects on an ongoing basis until the threshold of 50MW has been reached,” it said.

Qualifying aggregated load providers (ALPs) that meet the demand response criteria will be compensated to reduce aggregated electricity demand when dispatched via Eskom’s system operator.

The programme carries a minimum load entry level of 1MW and a maximum of 5MW, and those that apply must be the facilitator of the load being controlled through the agreement.

It is unlikely that a typical residential home would meet the load threshold for such a contract, however, bigger residential areas and gated communities like estates could ostensibly sign on, as long as they meet the conditions.

“An ALP could be referred to as an Eskom customer, a non-Eskom customer, a municipality or metro, a project developer or service provider, an energy services company or any other entity that is able to aggregate, control and measure electrical load from multiple sources, and provide this bulk load to the system operator to be dispatched,” Eskom said.

A performance contract will be put in place with the ALP for a period of up to three years, the group said, and participants will be expected to be able to curtail load twice a day for an hour at a time, minimum.

  • The ALP is scheduled on a day-ahead basis and dispatched on the day, with a 30-minute notification period.
  • The ALP must reduce load on instruction for a minimum of one hour with a maximum of two events per day (maximum 500 hours per annum).
  • The 30-minute interval remote metering is a prerequisite.
  • The ALP will receive an energy payment for the verified load reduced.

The demand response pilot is a national initiative, but municipalities are working on similar programmes more locally.

At the end of 2022, the City of Cape Town announced that it would be launching a “Power Heroes” programme, which operates in a very similar fashion – although the key difference is that the arrangements would be handled through a third-party group.

Under the Power Heroes programme, the city would ask for a reduction in usage to protect its customers. Third-party aggregators would then call on the ‘Power Heroes’ to switch off their usage, and, in turn, these users would be compensated in some fashion.

The end result is the same, however, with the City of Cape Town targeting 60MW of curtailment this way.

Read: Treasury explains why it exempted Eskom from irregular and wasteful expenditure reporting

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