Demand-side participation
The wholesale market has three options for demand-side participation: dispatchable demand, dispatch notification and difference bids.
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Dispatchable demand
A dispatchable demand regime enables demand-side participants to compete with generators to set the spot price and be able to respond more efficiently to wholesale market conditions.
Large consumers seeking better cost control (usually direct connect consumers), who are able to modify all or part of their electricity consumption at short notice, can use a dispatchable demand regime. They can reduce their electricity demand in accordance with their spot market bids and better manage their electricity costs.
What are the benefits of dispatchable demand?
There are a number of benefits to dispatchable demand, it:
- promotes competition in the wholesale market by enabling purchasers to compete with generators to set the spot price
- promotes the efficient operation of the wholesale market by improving the quality of information used to produce final prices
- promotes the reliable supply of electricity to consumers and the efficient operation of the industry by making existing demand response more certain
- provides financial compensation where the demand response has been impacted by the difference between the forecast price and the final price.
Is dispatchable demand for you?
If you buy electricity from the spot market, are able to modify all or part of your consumption at short notice, and would benefit from better cost control, then dispatchable demand may be for you.
The relative benefit to cost for your company will depend on the nature and flexibility of your electricity consumption, your ability to control consumption, and the potential cost savings. Read the following frequently asked questions.
How to become a dispatchable demand participant?
To participate in dispatchable demand, you or your agent will need to:
- become a dispatchable load purchaser - apply to the system operator for a dispatch-capable load station
- understand how to place bids and interact with the wholesale information and trading (WITS) system
- meter all or a part of your load (or your grid exit point) to an acceptable standard
- adjust your consumption promptly when your bid is dispatched and maintain your level of use at the dispatched level for the duration of the dispatch period.
Dispatch notification
Dispatch notification is a low-cost path to allow small scale generation and aggregated resources to directly participate in the spot market.
The owners of small-scale generation and flexible load, such as EV chargers, solar and battery installations or commercial buildings, could use these resources to manage spot price exposure for their retailers (subject to approval by the system operator). Or they could provide flexibility services, when there are transmission or distribution constraints in the power system.
Reacting to spot prices is one way of managing spot price exposure. But once a dispatch price is published it will form a component of the final price through the clearing manager’s averaging process. This could lead to the final price for the trading period still being higher than a consumer wanted to pay. By submitting bids and offers for flexibility services in the spot market, the price sensitivity of those resources can be included in the calculation of the dispatch price, potentially meaning the high price is not published in the first place.
Difference bids
Difference bids allow consumers or aggregators to signal their price sensitivity in the forecast schedules and asses the impact of their resources by comparing the non-responsive and price responsive schedule results.
The difference bids are not binding and are not included in the dispatch schedules. Participants can signal both a reduction in load at higher prices and an increase in load at lower prices.
The system operator automatically adjusts the forecast load at the grid exit point the difference bids are submitted for, to ensure that load is not double-counted in the forecast schedule results.
Contact
For information on how to become a dispatch notification or difference bid participant, contact market.services@transpower.co.nz.