The Australian Energy Market Commission (AEMC) is consulting on ways to better integrate unscheduled price-responsive resources into the national electricity market (NEM).
As more households and businesses invest in newer technologies such as batteries, rooftop solar, electric vehicles and home energy management systems, these consumer energy resources (CER) will play a vital role in the shift to a net zero energy system.
Similarly, traditional assets such as hot water heaters and pool pumps will continue to play their part in how the energy system performs and transforms.
As a result of the rapid uptake of CER, energy companies are increasingly combining these resources to form Virtual Power Plants (VPPs), which are actively responding to price signals in the national electricity market (NEM).
Additionally, there are commercial and industrial resources such as chillers and hydrogen electrolysers, which could be price-responsive and significantly impact the energy market in the future.
Currently, these resources are not fully integrated into the NEM’s planning and operation functions. By integrating them more effectively, AEMO could accurately determine how much energy demand needs to be met, how to meet this demand and the price at which electricity is purchased.
Better integration of these resources could lead to more efficient network and wholesale market services, reducing the overall cost of providing reliable electricity to consumers, ultimately leading to lower prices.
The Australian Energy Market Operator (AEMO) states that without efficient integration of price-responsive resources, additional costly large-scale generation, storage, and network infrastructure may be required to maintain a secure and reliable electricity supply.
Our consultation paper, published today, explores a proposal from AEMO for a voluntary mechanism to allow these resources to participate in the wholesale electricity market.
Through this, energy companies using the mechanism would improve the demand forecasts which underpin the efficient operation of the NEM. This would result in lower electricity spot prices, reduced generation costs, and decreased network expenses.
AEMO’s rule change is part of a package of reforms we are progressing in collaboration with AEMO and the Australian Energy Regulator to realise the benefits of CER for consumers and the system.
A directions paper we published today proposes reforms for measuring and managing CER separately. This reform aims to benefit not only the customers investing in those assets but all customers, through improvements in the operation of the power system.
Submissions in response to the consultation paper are being accepted until 14 September 2023.
View the project page for more information and contact details.
Media: Jessica Rich, 0459 918 964, firstname.lastname@example.org.