Smart Demand Response Capabilities for Selected Appliances

Non-compliance with COAG’s best practice regulation requirements – COAG Energy Council

On 22 November 2019, the COAG Energy Council agreed to introduce demand response capability requirements for air conditioners, electric storage water heaters (resistive), devices controlling swimming pool pump units, and electric vehicle charger/discharger controllers.

COAG best practice regulation requirements apply to decisions by ministerial councils or other bodies where there is a reasonable expectation of widespread compliance. Under the COAG requirements a Regulation Impact Statement (RIS) is prepared for the consultation stage, and for the decision stage.

A draft Decision RIS was prepared for this proposal, however the OBPR assessed the level of analysis in the RIS as not adequate nor commensurate with the potential economic and social impacts of the proposal. As the decision to introduce demand response capability requirements for selected appliances was based on this draft Decision RIS, the Energy Council is non-compliant with the COAG best practice regulation requirements.

The OBPR’s advice provided to the Energy Council was that to satisfy the COAG best practice regulation requirements, the Decision RIS, at a minimum, needed to:

• provide more detailed analysis and modelling to demonstrate how demand response by way of mandating AS/NZ4755 in selected appliances will achieve the stated benefits over the life of the proposal
• update cost assumptions in line with feedback from stakeholders, or provide sufficient explanation why these are not valid (and test these with stakeholders)
• provide sensitivity analysis on a range of key variables that could have a material impact on the net benefit of the proposal. For example, the case for mandating AS/NZ4755 for electric storage water heaters appears marginal – sensitivity analysis on some of the key cost assumptions could indicate the possibility that mandating compliance for this appliance would be unviable
• provide assurance AEMO would permit the verification method for demand response outlined in the RIS. If AEMO does not permit this method, the majority of the benefits associated with mandating compliance with the AS/NZ4755 would not materialise and the proposal would have a large net cost to the community
• provide a more thorough analysis of Option 2 – Encourage Voluntary Adoption of Demand Response Appliances, given the likely ability of this option to achieve the same objective at much less cost to the community.

The RIS used to inform the Energy Council’s decision can be downloaded from the Equipment Energy Efficiency (E3) program website.

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