Eskom’s Pilot Tackles Power Crisis: Small Businesses & Residential Areas Join Demand Response

Eskoms Exemption Sparks Debate
  1. Eskom is piloting a national demand response programme for small businesses and residential sectors, building on the success of their industrial Demand Response Programme to address South Africa’s electricity crisis.
  2. The pilot aims to evaluate the suitability of technologies, market uptake, and implementation in these sectors, targeting a threshold of 50MW with participating aggregated load providers (ALPs) receiving compensation for reducing electricity demand.
  3. In addition to the national initiative, local municipalities are also developing similar programmes, such as the City of Cape Town’s “Power Heroes” programme, which operates with third-party aggregators and aims to achieve 60MW of curtailment.

In an effort to address the ongoing electricity crisis in South Africa, embattled power utility Eskom is launching a pilot programme to test a national demand response initiative for small businesses and residential sectors. This expansion builds on the success of the industrial Demand Response Programme, which has been operational for over a decade.

Demand response programmes involve agreements between Eskom and participating power users. In exchange for reduced power usage during peak times or during unexpected outages, users receive compensation in the form of favorable rates or discounts. The system operator determines these times, and power reduction is crucial for stabilizing the grid. At present, Eskom primarily uses this system with industrial users through annual contracts.

Participants in the programme can receive financial incentives based on their actual performance, and they may potentially be exempt from national load shedding at stages 1 and 2, a process often referred to as load curtailment. Eskom’s pilot programme aims to extend these benefits to smaller businesses and energy users, including those in the residential sector.

The power utility’s objective with this pilot is to assess various factors, such as the suitability of technologies, market uptake, and the implementation and participation in this sector. Eskom plans to evaluate projects on an ongoing basis until the threshold of 50MW has been reached. Qualifying aggregated load providers (ALPs) that meet the demand response criteria will be compensated for reducing aggregated electricity demand when dispatched through Eskom’s system operator.

With a minimum load entry level of 1MW and a maximum of 5MW, the programme requires applicants to be the facilitator of the load controlled through the agreement. While a typical residential home may not meet the load threshold, larger residential areas and gated communities, such as estates, could potentially participate if they satisfy the conditions.

Eskom describes an ALP as any entity capable of aggregating, controlling, and measuring electrical load from multiple sources and providing this bulk load to the system operator to be dispatched. This could include Eskom customers, non-Eskom customers, municipalities, metros, project developers, service providers, energy services companies, or other similar entities.

A performance contract with the ALP will be established for up to three years. Participants will be expected to curtail their load twice a day for a minimum of one hour at a time. The ALP will be scheduled on a day-ahead basis and dispatched on the day, with a 30-minute notification period. Additionally, the ALP must reduce load on instruction for a minimum of one hour, with a maximum of two events per day and a maximum of 500 hours per year. Remote metering with 30-minute intervals is a prerequisite, and the ALP will receive an energy payment for the verified load reduction.

Although the demand response pilot is a national initiative, local municipalities are developing similar programmes. For example, in late 2022, the City of Cape Town announced the launch of its “Power Heroes” programme, which operates similarly to Eskom’s pilot but involves third-party aggregators. Under this initiative, the city requests a reduction in usage to protect its customers, and third-party aggregators call on “Power Heroes” to decrease their usage. In turn, these users are compensated in some form. The City of Cape Town aims to achieve 60MW of curtailment through this programme.

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