ARENA and Shell Energy to demonstrate commercial flexibility in Australia

Shell Energy’s ‘Commercialising Smart Energy Hubs’ project will recruit at least 40 commercial and industrial (C&I) customer sites to demonstrate flexible demand capacity.

The project will involve shopping centres, supermarkets and a refrigeration distribution centre across Queensland, New South Wales, and Victoria to demonstrate an estimated 21.5MW of flexible demand capacity.

On behalf of the Australian Government, the Australian Renewable Energy Agency (ARENA) announced AUS$9.1 million ($5.7 million) in funding to Shell Energy Australia for the project, which amounts to AUS$31.6 million ($19.7 million) in total.

The project involves building a whole-of-site solution to optimise the energy system including heating, ventilation and air conditioning (HVAC), refrigeration, electric vehicle (EV) charging control, and onsite solar PV and storage.

These sectors represent the largest near-term opportunity for flexible demand capacity due to their large thermal loads with opportunities to manage heating and cooling, and a strong industry imperative to move to sustainable outcomes where possible.

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Demand flexibility offers a way to reduce the load on the grid during busy periods, reducing energy costs, lowering peak demand and moving energy loads to when there are high amounts of renewable energy. It can be implemented in real time in response to market signals, generation shortfalls or network constraints.

If successful, the project will address regulatory and commercial barriers to broader adoption and delivery of flexible demand services, with Shell Energy aiming to unlock 417MW of flexible demand.

Shell Energy also aims to use the project to address barriers to large-scale C&I flexible demand by unlocking new revenue streams and exploring regulatory change with the Wholesale Demand Response Mechanism (WDRM), the Reliability and Emergency Reserve Trader (RERT) and state-based certificates such as the NSW Peak Demand Reduction Scheme (PDRS).

ARENA CEO Darren Miller said concerning the importance of supporting flexible demand projects: “For commercial and industrial sites, flexible demand is a potential alternative to costly upgrades to network infrastructure or building large-scale batteries. To achieve the full potential of flexible demand, we will require new innovation, technologies and market processes.

“Shell Energy’s initiative represents ARENA’s first C&I project to demonstrate a whole of site optimisation of energy demand management for delivery of market, ancillary and customer benefits through the control of energy load.

“We look forward to working with Shell Energy in showing how we can unlock the potential and accelerate flexible demand at C&I sites and businesses.”

Shell Energy has been developing and testing its C&I load flex product (LoadFlex) capability since 2019, culminating in the launch of a Smart Energy Hub pilot project with The GPT Group at its Chirnside Park Shopping Centre in September 2022.

The pilot will see the Chirnside Park Shopping Centre become the first carbon neutral shopping centre with a 2MWh battery and 650kW solar array with a demand response load which uses predictive technology that enables load reductions of up to 70% during peak times.