Estimating the Technical Potential for Residential Household Appliances to Reduce Daily Peak Electricity Demand in New Zealand

Abstract

The successful operation of an electricity system necessitates balancing electricity supply and demand. It is widely recognized that fluctuations in electricity supply and demand have the potential to generate negative effects, such as jeopardizing the security of electricity supply. This leads to an inefficient use of the electricity system infrastructure.

In New Zealand, residential household appliances contribute significantly to national electricity demand and, in particular, to peak demand. Concurrently, electricity demand is forecast to increase. New Zealand’s commitment to carbon neutrality by 2050 requires this increased demand to be met by fluctuating renewable energy sources, as hydroelectricity is operating at capacity. This will challenge the capacity of the electricity system to supply peak demand.

Sophisticated energy management targets peak demand and comprises of a mechanism referred to as demand side management to ensure system balance. Demand response and energy efficiency are two subsets of this mechanism. These two tools pursue different approaches to reducing peak demand. While demand response focuses on the timing of electricity demand, energy efficiency reduces total electricity demand, and thus peak demand.

This thesis estimates the technical potential of demand side management to reduce the electricity peak demand from key appliances in residential households. Sub-hourly data on the electricity demand profiles of hot water heaters, heat pumps, refrigeration, and lighting are used to develop average demand profiles. Subsequently, demand response scenarios that reduce or shift demand are combined with a forecast of energy-efficient lighting to estimate the power potential and its economic value.

The analysis shows that residential demand side management involving demand response for hot water heaters, heat pumps, and refrigeration, as well as energy efficiency applied to lighting, has a maximum technical potential of reducing national demand in winter by up to 34%. This equates to an average daily energy reduction of 12,700 MWh.

Based on current time-varying prices and typical congestion charges, the economic value of shifting the residential demand of hot water heaters, heat pumps, and refrigeration away from peak intervals was estimated to be up to $73 million NZD per year. Combined load shifting under demand response with energy-efficient lighting increases this annual economic value of demand side management to $164 million NZD. Demand response would also increase overall system efficiency. However, achievement depends on social and financial factors outside the scope of this thesis.