The AEMC has released proposals to open up the wholesale electricity market so large consumers can be more easily paid for reducing their demand on the power system. The wholesale demand response mechanism draft rule is in response to requests received from the Total Environment Centre, The Australia Institute and the Public Interest Advocacy Centre; the Australian Energy Council and the South Australian Government. 

The discussion notes published today summarise key themes from a workshop held on 22 August 2019. If you were unable to be part of the discussion on the day a recording of the workshop webcast is available here.

This was the second of two workshops and was hosted by AEMC Chairman, John Pierce, and Commission staff. The workshop was open to all stakeholders and focused on a broad range of matters arising under the draft rule. Topics discussed included:

  • the proposed settlement process under the draft rule and its implications for market participants
  • the arrangements relating to baselines under the draft rule
  • how wholesale demand response would be integrated with central dispatch under the draft rule
  • the proposed implementation timeframes for the draft rule
  • what consumer protections would be required for small customers to participate in the mechanism.

The first workshop was held on 16 August 2019 and focused on matters that arise specifically for retailers under the draft rule. Discussion notes from the first workshop are also available here

Submissions on the draft determination are due by 12 September 2019. A final determination is due to be published in November 2019.

These rule change requests are being progressed as part of the Commission’s broader system security and reliability action plan

Media: Prudence Anderson, Communication Director, 0404 821 935 or (02) 8296 7817

Draft determination

On 18 July 2019 the AEMC released a draft determination to implement a wholesale demand response mechanism.

Under the draft rule, a new category of registered participant, a demand response service provider (DRSP), would be able to bid demand response directly into the wholesale market as a substitute for generation. A DRSP could also engage directly with a customer without the involvement of that customer’s retailer.

The mechanism introduced under the draft rule is designed to provide greater opportunities for consumers to participate in the wholesale market by bidding in demand reductions as a substitute for generation, thereby unlocking under-utilised demand response in the national electricity market. The Commission considers that the mechanism will promote greater demand side transparency, as well as price and reliability-related benefits.

The Commission considers it important to provide opportunities to all consumers to participate in wholesale demand response. However, it is also important to make sure that appropriate energy-specific consumer protections are provided to consumers participating in the mechanism. As a result, the draft rule does not provide for small consumers to participate in the mechanism.

The substantive parts of the rule implementing the wholesale demand response mechanism are proposed to commence on 1 July 2022. The Commission has also made a series of complementary changes and recommendations relating to increasing transparency of wholesale demand response in the wholesale market.