Turn off the mill….and make money

Enernoc, like so many entrepreneurial US companies, was started in a garage, in this case by two hotshot graduates of Dartmouth College in the USA.

The company is celebrating its tenth anniversary this year and has grown quickly to 650 staff across operations in the USA, UK, Canada and Australia.

It now bills itself as the world’s largest provider of demand response services. In effect, it pays industrial customers, like miners, to cut their energy needs at times of maximum demand on an electricity network. In turn, it earns a return from the network provider, which does not need to build generating capacity for spiking energy demand on the one or two hottest days of the year.

Enernoc is active in Western Australia, with a contract with the Independent Market Operator, which operates and develops the wholesale electricity market in that state. It is also involved on the east coast with Ausgrid and Transgrid.

In WA, Enernoc has contracts with five significant miners, three in gold mining and one each in mineral sands and garnet.

Each of these customers has signed up to a different “curtailment plan” which details how it will provide energy to the grid.

“The miner signs a deal which says it will take actions X, Y and Z that results in these megawatts up to a total of, say, 24 hours per year,” explained Jeff Renaud, director, Australia & New Zealand, Enernoc.

“There are other conditions, for example, that no one event can be over four hours.”

Just how a miner chooses to save energy will vary. One operation might opt for a full shut down of extraction and milling, while another may opt for lesser measures. A thickening circuit may be kept running if there are likely to be complicated start-up issues, and buffering of production will be a consideration.

Returns to an industrial customer, such as a miner, can range from between 1 – 2% of energy spend, up to 5 – 6%.

“For a large mining customer, over a five year deal, it can be a seven figure payment,” said Renaud. Globally, Enernoc has paid US$350m to its customers.

Underpinning Enernoc’s business is some fairly sophisticated metering and software, which Renaud describes as a “robust technical platform”.
Two-way smart metering is installed at customers’ sites at the mains level, and on occasion at the sub-mains level. This is connected to Enernoc’s operating centre, staffed 24/7, which is based, locally, in Melbourne.

“Customers get a web-based login and view energy consumption in real time and on a historical basis,” said Renaud. “As a peripheral benefit, there’s a goldmine of visibility of energy data and customers get a sophisticated look at their energy consumption.”

Enernoc acquired its chief Australian competitor, Energy Response, earlier this year for $28m.

Comment: With the Carbon Tax finally passing Parliament, for better or worse, miners now need to switch their focus to practical measures to deal with the new impost. Demand management and smart grids can reduce Australia’s energy consumption, while delivering cash to some miners. Definitely worth investigating.

Contact: Charles.macdonald@informa.com.au