AU & NZ Markets
2 mins

Piclo Launches Flex Contracts in Australia: A Game-Changer for Network Operators and Energy Users

A couple of months ago UK-based Piclo launched in Australia after striking a deal with Victorian DNSPs United Energy, CitiPower and Powercor to publish flex contracts on the Piclo platform.

The basic idea is this: when network operators have a constraint within a particular part of their network they publish that to Piclo as a contract. This includes the price they’re prepared to pay for energy users to help alleviate the constraint, typically by turning energy consumption up or down. This is referred to as load “flex”.

Along with the price, they also publish the nature of the flex requirement (up or down) and some indications of how often the service will be required over the course of a contract, which often aligns to season, say summer 2025.

If they’re connected to the relevant part of the network, then homes and businesses can choose to offer in their flexible assets to participate in these contracts.

Whilst flex contracts are commonplace in markets like the UK, they’re relatively less common in Australia due to historical issues with how requirements for "Non-Wire Alternatives" have been published and contracted by DNSPs, which Piclo and the Victorian DNSPs are trying to improve. But these contacts still need to be commercially viable for network users and asset owners, so we thought we'd run the numbers based on the current contracts on offer:

  • Median prices range from $9k/MW to $21k/MW
  • Citipower appear to be offering contracts all the way up to $210k/MW
  • Participation duration range from 6 hours all the way to 720 hours per contract
  • Participation periods range from well fairly defined afternoons (2pm to 9pm) to entire days

For owners of assets, working out if these contracts are the right fit for them is complex. The headline price is one thing, but the timing and duration of the flex response is equally important to work out if and how these contracts fit within their exist value stack.

Understanding the opportunity cost of participating in these contracts is key, which we'll dig into next.

Note: contract value is guesstimated by dividing the max budget allocated by the max capacity required

For more information on network tariffs, check out this series of videos. If you'd like to see how these tariffs could impact your energy projects, click here to book a call with our team.

Pete Tickler
Chief Product Officer & Co-Founder
Gridcog
July 9, 2024
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