Dispatchable demand

Dispatchable demand:

• promotes competition in the wholesale market by enabling purchasers to compete with generators to set the 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 purchase electricity from the spot market, are able to modify all or part of your consumption at short notice for the time periods you specify, and would benefit from having more control over your electricity costs, 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 size of your potential to save on costs.

To be able to participate, you or your agent will need to understand how to place bids and interact with the wholesale information and trading system (WITS). You will need to meter all or a part of your load (or your grid exit point) to an acceptable standard. You will also need to be able to adjust your consumption promptly when your bid is dispatched, and to maintain your level of use at the dispatched level for the duration of the dispatch period.

Details about dispatchable demand are in Parts 1, 13, 14 and 15 of the Code.

Dispatch capable load stations

A participant who wishes to participate in dispatchable demand must first apply to the system operator for the load it wishes to be dispatched to become a ‘dispatch-capable load station’ (DCLS).

See the System Operator's site for further details:

System Operator's website

Once approved, it can elect whether to subject itself to dispatch by the system operator in any trading period. If the DCLS elects to be dispatched in a trading period, it must closely follow its dispatch instructions. If it elects not to be dispatched in a trading period, it will not receive dispatch instructions but can continue to use electricity but will not receive any of the benefits of dispatchable demand.

The purchaser must submit a separate nominated bid for every trading period which will specify the quantity of electricity the DCLS expects to use at different price levels. If dispatch is elected, the dispatch instructions will be consistent with that dispatch bid.

Dispatch bids will be used as an input into all schedules, including the final pricing schedule. Therefore a dispatch bid may set the market price, just as generators’ offers set the market price.

In certain circumstances, dispatched purchasers will receive constrained on or constrained off payments with respect to their dispatch bids. This will compensate them for any differences between the dispatch price and the final price that is calculated the following day. These payments have the effect of ensuring that the DCLS will not pay more for its electricity than its bid price.

There are no payments made for a DCLS reducing electricity consumption. The reward for participating in the dispatchable demand regime is that the DCLS can more effectively avoid electricity usage at times of high prices, which will result in a cost saving over time

Join the dispatchable demand user group

The user group is open to any potential user of dispatchable demand, either on their own behalf or for clients. The purpose of the group is to support potential users in deciding whether to use dispatchable demand, and their preparation by facilitating information flows and interactions between users and the Authority, the system operator and the wholesale information and trading system manager.

To join, email us with 'Dispatchable demand user group' in the subject line.

Email: info@ea.govt.nz