The Australian Energy Market Commission (AEMC) today published the final report for Stage 2 of its ongoing three stage Review of Demand-Side Participation (DSP) in the National Electricity Market (NEM).
The demand-side of the NEM is currently under-developed and the review is examining how best to support more active and efficient responses by electricity consumers to changing market conditions.
Stage 2 of the review has focused on whether the current market frameworks and Rules create impediments to efficient DSP, and on ways to reduce or remove any identified barriers. The Stage 2 report has been submitted to the Ministerial Council on Energy (MCE) and includes a number of recommendations for framework changes.
AEMC Chairman, Dr John Tamblyn, said today that analysis and stakeholder consultation supports a broad finding that the current Rules as varied by the recommended changes do not impede DSP in the NEM. He noted, however, that because of the limitations of current metering and pricing methodologies, the demand-side is likely to continue to be under-represented in the market in the short term at least.
The analysis in the report identifies a number of different ways DSP can contribute to the overall efficiency of the market. For example:
- the use of DSP by network businesses to avoid network augmentation;
- the use of embedded generation by customers as a substitute for system generated electricity; and
- DSP as a tool for maintaining reliable supply in the market when capacity is tight.
The Stage 2 report makes a number of specific recommendations:
- A Rule change to remove a bias that influences the choice between operating and capital expenditure for transmission businesses.
- As foreshadowed in the Review of Energy Market Frameworks in light of Climate Change policies, improvements to the incentives for network businesses to develop innovative DSP solutions and cost effective embedded generator connections.
- That the Reliability Panel, as part of its Technical Standards Review, consider further the appropriate minimum technical standards for embedded generators.
- A Rule change so that network support payments are only made once to embedded generators that help to avoid augmentations in the transmission network.
"As the community sees continuing increases in electricity prices over time, along with the roll-out of ‘smart grid' and ‘smart meter' technology, there will be more incentives and opportunities for DSP," Dr Tamblyn said.
"Rules must be designed to ensure that potential benefits are realised and delivered to customers - particularly in relation to the roll-out of, and access to, ‘smart grid' technology, and the future potential for energy efficiency measures. This will be the focus of the DSP review's Stage 3. Particular issues for consideration in relation to smart grids include the incentives for their efficient implementation, operation and cost recovery, and the appropriate rights and protections for customers."
"We intend to work closely with governments and other stakeholders in developing an appropriate specification for further work in this area," he said.
For further information contact:
AEMC Chairman, Dr John Tamblyn 02 8296 7800
AEMC Communications, Prue Anderson 02 8296 7800 or 0404 821 935