Villain #5d – obsessing about Negawatts, when the real objective is (broader) Demand Response

It’s been apparent to me for some time that this trip-wire is growing in significance as a Villain that’s working to ensure that this energy transition is taking a much rockier path than should otherwise be the case.  One of the Villains in the evolving train-wreck has been (in my view) not focusing on the real problems – we called this Villain no 5.


With the current AEMC-sponsored deliberations about ways to encourage more demand response into the market, it seems we run the risk of becoming hijacked by a different version of this Villain – becoming obsessed about NegaWatts (as a supply-side option in central dispatch) when the real objective is facilitation of significantly more Demand Response.

My sense is that a percentage of our readers will be thinking “but they’re the same, aren’t they?” and (my sense is that) therein is the root of the problem….

(A)  A quick refresher on Demand Response

If you’re also asking that question, you’re not alone.  That’s part of the reason that we put together this site as an explanation a couple years ago, and have been adding to it (as time permits) since that time.

In a nutshell, “Demand Response” is a term that refers to a fairly broad range of approaches that can be taken to encourage greater flexibility of the timing of electricity consumption by energy users in response to some form of commercial incentive.  That’s not to get confused with “Energy Efficiency”, which is about permanent reductions in energy use for the same unit of value received for the energy use.

In the NEM to date there have been a number of methods whereby Demand Response has been growing since NEM start, and we have been involved in helping some of these to grow significantly.

(B)  NegaWatts, as a supply-side option

The explicit dispatch of “NegaWatts” (be that by a retailer, or via some centralised process – as the AEMC considered in 2015, and is now considering again in 2019) is only one subset of a much broader range of measures that fit under the Demand Response umbrella.

If the overall objective is to encourage the demand side of the supply/demand balance to be more active and responsive in the energy balance process, then prematurely narrowing in on only one possible approach to achieving this objective seems to carry the risk of a sub-optimal outcome.  Doesn’t it?




About the Author

Paul McArdle
One of three founders of Global-Roam back in 2000, Paul has been CEO of the company since that time. As an author on WattClarity, Paul's focus has been to help make the electricity market more understandable.

1 Comment on "Villain #5d – obsessing about Negawatts, when the real objective is (broader) Demand Response"

  1. Paying a business not to use electricity seems completely counter-intuitive. I understand that if generation cost goes high, that a business might have a threshold beyond which it is cheaper to stop producing. But surely this is cave dweller stuff? How can we justify developing an electricity supply system that deliberately restricts business output?

    “Hi, sorry, we can’t make that coffee for you right now, we are practising demand management, since the cost of power is greater than what we can sell the coffee for…” That’s not a helpful conversation.

    (And I know it’s a facetious analogy, but I’m practising humour demand management… 🙂 )

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