Review of the Wholesale Demand Response Mechanism

Market Review: Completed

Overview

On 23 October 2025, the Australian Energy Market Commission (AEMC) delivered a final report for the review of the wholesale demand response mechanism (WDRM).

The final report made two recommendations for the WDRM: that the WDRM should continue operating; and that the Expanding eligibility under the WDRM rule change request be initiated.

The WDRM allows demand response to be offered into the NEM

The WDRM was established through a rule made on 11 June 2020 and commenced operation on 24 October 2021. It enables demand response service providers to offer demand response into the NEM, where it can be dispatched in the same way as generators.

The 2020 rule also required the AEMC to review the WDRM under Chapter 3 of the National Electricity Rules. In doing so, we considered the WDRM's role in enabling demand-side participation and its performance to date.

The WDRM has a role in the NEM

Our final report recognises that the WDRM enables some electricity users to have their demand response participation effectively incorporated into market outcomes, which benefits all electricity consumers.

TheAEMC’s analysis estimated that between October 2021 and June 2025, the WDRM has resulted in:

$5.32 million ($1.42 million per year) of dispatch efficiency benefits
$42,757 emissions reduction benefits.

Which is greater than its operational costs of $350,000 - $500,000 per year.

Two-sided market reforms are the main vehicle for demand-side participation

Introducing the WDRM in 2020 was a move towards improving demand-side participation in the market. Since the 2020 WDRM rule, the AEMC has continued to progress this through the Unlocking CER benefits through flexible trading (CER benefits) and Integrating price-responsive resources into the NEM (IPRR) rule changes.

Through the combination of these two reforms, participants can separate flexible and inflexible resources behind a connection point and participate in the wholesale market with the flexible or controllable resources. As a result, these two reforms provide a flexible and robust method for demand-side participation in the NEM dispatch process for many electricity users.

While the voluntarily scheduled resource (VSR) framework, introduced through IPRR, is the key vehicle to facilitate broad demand-side participation, the WDRM can provide important additional benefits alongside this.