Electricity costs are a significant operating expense at most industrial sites: mines, sugar mills, water utilities, industrial gas facilities. The wholesale electricity price that a site pays can vary by orders of magnitude within a single day, particularly in the NEM (National Electricity Market) during demand peaks or network events. A site that is indifferent to electricity price is leaving significant money on the table.
Demand response, automatically reducing or shedding load in response to electricity price or grid signals, is not a new concept. Large industrial energy users in Australia have been participating in demand response programmes since the NEM was established. What has changed is the accessibility of the technology needed to automate it.
How the NEM spot price works
AEMO publishes the NEM spot price every five minutes for each region (Queensland, NSW, Victoria, South Australia, Tasmania). The spot price is set by the intersection of supply and demand in the dispatch process, and it can range from the market floor price of -$1,000/MWh to the market cap of $16,600/MWh.
For large industrial energy users on market-linked electricity contracts, the price they pay is directly tied to the spot price, often with a risk management component (a hedge or cap contract) that manages exposure to extreme prices. For these users, a period of high spot prices that runs unmanaged can represent a significant cost spike.
Real-time access to the AEMO spot price allows a site to monitor the price continuously and take automated action when the price exceeds a threshold: shedding deferrable load, reducing the speed of large motors, or delaying energy-intensive processes until the price falls.
What loads can be shed
Not all loads are equally suitable for demand response. The most suitable loads are those that:
- Can be interrupted briefly (minutes to an hour) without affecting product quality or process safety
- Have significant energy draw, such as large motors, compressors, pumps, chillers, and heaters
- Have some storage or buffer capacity, such as a mill that can briefly reduce conveyor speed without losing product, or a water treatment plant that can delay a pump cycle while the balance tank has capacity
In sugar mills, the loads best suited to demand response include:
- Milling conveyors and cane preparation equipment, where brief speed reductions are tolerable within the mill’s overall throughput model
- Boiler feed systems, where multiple boilers provide redundancy and one can be taken to minimum load temporarily
- Compressed air systems, where brief load reduction is possible while receiver pressure remains adequate
In water utilities:
- Pump stations, where storage tanks have capacity and pump cycles can be deferred during high-price periods
- Treatment plant aeration, where process chemistry permits brief interruptions without product impact
In industrial gas and manufacturing:
- Compressors, where brief unloading is possible while process pressure margins allow
- Refrigeration systems, where brief load reduction is possible where thermal mass provides buffer
The control system integration
Automated demand response requires integrating the AEMO price signal into the site’s control system, so that when the price exceeds a defined threshold, the PLC or SCADA can automatically act.
The architecture for this integration is straightforward:
- A data acquisition system retrieves the AEMO 5-minute dispatch price for the relevant NEM region via AEMO’s API
- The price data is passed to the PLC or SCADA via an appropriate interface: a Modbus TCP register, an OPC tag, or a direct database write to the SCADA historian
- The PLC or SCADA logic evaluates the current price against defined thresholds and initiates load shedding actions when thresholds are exceeded
- Load restoration occurs automatically when the price falls below the threshold, or is managed by operators who receive alerts when a demand response event is active
The control system integration for demand response does not need to be complex. A simple threshold-based approach, shedding specific loads when the price exceeds a defined value and restoring them when it falls, delivers the majority of the benefit with minimal control logic complexity.
Beyond sugar mills
While demand response is well-established in the sugar industry, and mills have been participating in AEMO demand response programmes for many years, the same capability is directly applicable to any high-energy-use industrial operation connected to the NEM.
The principle is identical regardless of industry: monitor the wholesale electricity price in real time, and automatically manage discretionary load to avoid operating major electrical equipment during the most expensive periods. The implementation details differ by site and load type, but the control system integration approach is the same.
About the author
Dennis Murphy RPEQ designed and delivered a real-time AEMO demand response integration system for Mackay Sugar in 2024, connecting live AEMO wholesale electricity price data to the mill’s PLCs and SCADA to enable automated demand response. Contact: [email protected]