Australia has one of the most rapidly evolving energy markets in the world. But with rising energy demand, high renewable penetration and retiring coal-fired plants, power networks need flexibility.
Step forward Italy’s Enel and Virtual Power Plants (VPPs). These aggregate the flexible energy demand of businesses, coordinating their ability to reduce or shift electricity use when needed. Together, this flexibility acts like a power plant, supporting the grid by reducing demand rather than increasing generation.
An Enel subsidiary, Enel X Australia, now connects more than 670 businesses and manages more than 800 MW of capacity across Australia and New Zealand.
Its VPP technology creates opportunities for Australian businesses to participate in energy markets, earn additional revenue from their existing energy assets and contribute to a more reliable, renewables-led electricity system.
Investment in novel energy technology
Headquartered in Italy, Enel is a global energy company with extensive renewable generation and flexible demand capabilities.
Enel X established its Australian operations in 2009 and has since become a market leader in commercial and industrial VPPs. Globally, Enel X manages more than 10 GW of flexible demand capacity.
Its local team of around 50 people spans Australia and New Zealand, with expertise across energy markets, engineering, customer operations, software development and commercial functions. This local capability enables Enel X to deploy and operate complex energy solutions while making participation straightforward for Australian businesses.
Why Australia for energy innovation
Australia’s combination of a rapidly changing electricity system, sophisticated energy markets and large commercial and industrial energy users has created strong opportunities for flexible demand.
As renewable generation has grown and energy costs and price volatility have increased, businesses have become more interested in using flexibility within their operations to participate in energy markets, reduce costs and support the electricity system.
According to Sheralyn Derrick, Austrade Investment Director, Australia’s energy market is inherently attractive to investors.
‘Australia benefits from transparent market frameworks, a strong customer base of energy-intensive industries and clear policy direction toward decarbonisation and energy security,’ she says.
‘Also, Australia’s stable governance and business frameworks make us an attractive market for innovative energy investors.’
Helping Australian energy networks evolve
Enel X has achieved several Australian market firsts since establishing its local operations.
In 2018, it became the first VPP operator to participate in Australia’s Frequency Control Ancillary Services (FCAS) market, enabling aggregated flexible demand to help maintain the balance between electricity supply and demand and keep system frequency close to 50 Hz.
In 2021, Enel X also became the first demand response service provider to participate in Australia’s Wholesale Demand Response Mechanism. This opened another pathway for commercial and industrial businesses to reduce electricity demand in response to market needs and be rewarded for doing so.
These developments have helped establish flexible demand as an increasingly important resource as coal-fired generation retires and renewable generation grows.
VPPs bring long-term benefits to Australia
The value of VPPs to Australia is threefold:
- support the integration of more renewable energy
- strengthen grid stability and resilience
- enable Australian businesses to earn revenue by making their energy flexibility available when the grid needs support.
By coordinating flexible demand across hundreds of commercial and industrial sites, VPPs can reduce pressure on the electricity system during periods of high demand or constrained supply. They can also reduce reliance on higher-emissions forms of generation traditionally used to meet periods of peak demand.
For participating businesses, the model creates new value from existing energy assets and operational flexibility, while allowing them to contribute directly to the reliability and sustainability of the electricity system.
A mature regulatory environment
For investors, part of the attraction is the way Australia’s energy markets are evolving.
Australia’s regulatory environment is complex but mature, with markets designed to provide clear price signals that value flexibility, reliability and fast-responding resources.
There is also strong scope for constructive engagement with regulators and market bodies. As policy evolves to support a wide variety of energy resources, Enel X engages with regulators and market operators on market rule changes and ways to incentivise energy users.
Enel X also contributes global expertise to discussions around market design, consumer energy resources and the role of demand-side solutions.
Austrade assistance opens doors
Austrade helps Enel X in 3 ways: market intelligence, connections with key industry and government stakeholders, and timely information on new opportunities.
Support from Austrade teams in Italy and Australia has helped the company position its solutions within Australia’s broader energy transition ecosystem and navigate opportunities resulting from new Australian policies and programs.
Australia’s energy expertise
Enel X Australia has grown rapidly thanks to the availability of a skilled workforce. Australia has a strong pool of talent in energy markets, engineering, data and software, as well as commercial operations.
Enel X carries out significant operational, engineering and solution-development work in Australia, including tailoring global platforms and expertise to Australia’s unique market structures. This local capability is critical to the company’s success and continued growth.
Continued growth in Australia and the Asia-Pacific
Enel X will continue to grow in Australia. In New South Wales, the state government has contracted Enel X to deliver 127 MW of flexible demand as a cost-effective resource.
Australia is a key hub for Enel X in the Asia-Pacific region, with Australian expertise supporting regional expansion and enabling the company to share innovation, expertise and learnings across markets undergoing similar energy transitions.
How Austrade can help
The Australian Trade and Investment Commission (Austrade) supports foreign investors to establish and expand operations in Australia. Our experts in Australia and around the world can help you through every stage of your investment journey.
We offer the latest industry insights, connections with key stakeholders and decision-makers, and virtual or physical site visits to Australia. Thousands of foreign businesses have worked with us to tap into the Australian market.
For information on investment opportunities in Australia, contact an Austrade investment specialist.
Go further, faster with Austrade
Subscribe to the Investment Update newsletter to find out about new investment opportunities, insights and investor success stories across Australia.