The AEMC today published a consultation paper on three rule change requests to enable more wholesale demand response in the national electricity market. 

Innovations in technology are making it easier for industrial customers and households to provide ‘demand response’ by turning off or reducing power use at very high demand times. This can help keep costs down by avoiding unnecessary investment in peaking generation that is only used for a few days a year. 

The COAG Energy Council recently agreed to progress a recommendation made by the ACCC in its Retail Electricity Pricing Inquiry report to support the development of a mechanism for third parties to offer demand response directly into the wholesale market. The AEMC has also recommended the integration of more demand response through a wholesale demand response mechanism in our Reliability frameworks review. The three rule change requests relate to these recommendations.

• The Public Interest Advocacy Centre, Total Environment Centre and the Australia Institute are proposing a mechanism that would allow third parties, such as demand response aggregators, to offer demand response into the wholesale market in a transparent, scheduled manner.
   
• The Australian Energy Council is proposing a register for wholesale demand response. This would introduce an obligation for retailers to negotiate in good faith with third parties looking to provide wholesale demand response through a register.
   
• The South Australian Government is also proposing a wholesale demand response mechanism, as well as a separate, transitory market for wholesale demand response as an interim step.

The consultation paper considers a range of issues raised by the rule change requests. These include: the benefits and costs of changing the regulatory framework to introduce a new mechanism; the role of baselines for calculating the quantity of demand response provided; how local generation and battery storage could be included in the mechanism; and implementation timeframes and costs.

Assessment of these rule changes will be informed by trials and studies undertaken by AEMO and ARENA looking at demand response and also ARENA's Distributed Energy Integration Program, which is a collaboration of energy industry bodies including the AEMC looking at how to harness the potential of consumer-owned energy. 

The rule change requests have not been consolidated at this time. Stakeholders’ submissions will inform the timeline and process for the three rule change requests. Given the complexity and broad scope of the issues covered by the requests, affecting many areas of the National Electricity Rules, the standard rule making process may need to be extended.

Submissions on the consultation paper are due by 21 December 2018. 

This project is part of the AEMC's System security and reliability action plan.

Media: Bronwyn Rosser, Communications Specialist, 02 8296 7847; 0423 280 341; bronwyn.rosser@aemc.gov.au