The AEMC today released a consultation paper on a proposal from AEMO to introduce a short term forward market to enable participants to contract for electricity in the week leading up to dispatch.
By allowing the trading of electricity contracts closer to real time, the new AEMO-operated platform could give participants greater price certainty and more options to manage financial risks. AEMO proposes that this could particularly benefit:
- demand response providers – giving them more confidence in their offers to reduce their demand in response to high price events, and more options for managing their exposure to high spot price events
- intermittent renewable generators – so they can offer electricity contracts to the market when they have greater certainty of what they will be generating
- gas fired generators – providing short-term price certainty when purchasing gas from gas markets.
Today’s consultation paper is seeking stakeholder feedback on the proposal including:
- how is short term risk currently managed in the national electricity market, and would a short term forward market be beneficial
- what design elements should be considered as part of a short term forward market
- how significant are the implementation costs and what other implementation issues should be considered in the rule change assessment.
Submissions are due by 23 May 2019.
This work is part of the AEMC’s system security and reliability action plan.
Media: Prudence Anderson, Communication Director, 02 8296 7817; 0404 821 935
This rule change request is based on a recommendation made by the AEMC in our 2018 Reliability frameworks review on how to integrate more demand response into the wholesale electricity market. In addition to a short term forward market, the AEMC also recommended the development of a wholesale demand response mechanism which is being progressed through a separate rule change process.
For more information see our Reliability work plan.