South African power utility Eskom will start implementing an innovative demand response aggregation pilot programme (DRAPP) this month with the intention of securing 500 MW of buy-back contracts from as many as 1 000 industrial and commercial customers by the start of winter 2012.

The initiative was being implemented as part of a series of supply and demand actions designed to stabilise the power system in the context of a chronically “tight” operating environment.

CEO Brian Dames made a fresh appeal at the end of January for South Africans to urgently reduce electricity demand by 10%, or some 3 000 MW, to enable it to ramp up its planned maintenance activities and create the space for continued economic growth.

He warned that 2012 and 2013 would be particularly vulnerable to disruptions, owing partly to a recovery in demand, as well as delays to the introduction on new base-load capacity from the Medupi power station, which was being built near Lephalale, in Limpopo.

The Integrated Resource Plan for electricity indicated that the first Medupi unit should be operational by the first quarter of 2013, but Dames indicated that Eskom was only planning for the first unit to be introduced during late 2013.

Attention was, therefore, shifting to demand-side management programmes, which delivered energy savings of 198.6 GWh during the third quarter of 2011. Efforts would also be intensified to ensure that the voluntary energy conservation scheme for Eskom’s top 250 customer be made mandatory.

Through the DRAPP Eskom planned to incentivise businesses to reduce consumption during critical periods and aggregate a large number of small loads to make the buy-backs worthwhile from a system perspective.

Eskom planned to conclude buy-back deals worth 500 MW by winter and scale the scheme up to 2 000 MW over the coming two years.

In December, the State-owned utility concluded a $27-million deal with Comverge, of the US, to create a new market for demand-response resources arising from a large number of small loads.

Comverge would deploy an information technology platform through which Eskom would register, dispatch and operate a competitive demand response market. Similar aggregations solutions had been used to reduce demand in countries such as the US, Australia, New Zealand and more recently in Europe.

In South Africa, customers with loads that could be reduced by 200 kW or more would be targeted for the aggregation scheme, which would offer similar incentives to Eskom’s demand market participation scheme for large industrial customers.

The scheme would be deployed on a merit-order basis in a bid to lower the cost of the programme.

Eskom said it was premature to comment on how much the buy backs would cost it yearly, but said that any costs or savings would eventually be reflected in its tariff applications to the National Energy Regulator of South Africa.

The system operator would dispatch loads secured, but no payments would be made to those contracted customers that failed to respond. Frequent infringements by companies would result in the customer’s certified load being reduced.

Currently, only commercial and industrial customers were being prioritised, but Eskom said the residential market was a potential future target market.