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AUS Regulator Proposes Allowing Non-Retailers To Offer Demand Response Directly In Wholesale Market
July 17,2019 The Australian Energy Market Commission (AEMC) has released proposals, "to open up the wholesale electricity market so large consumers can be more easily paid for reducing their demand on the power system." The wholesale demand response mechanism draft rule, released today for consultation, would allow non-retailers to offer demand response directly into the wholesale market for the first time. AEMC Chairman John Pierce said changes would be put in place as quickly as possible to help take the pressure off the power system by meeting our electricity needs through the lowest cost mix of demand response and supply. “This draft rule is all about large commercial and industrial consumers in the wholesale market who can now participate directly in the wholesale market by offering in demand reductions. These are times in which those consumers have agreed not to consume electricity or consume less or later,” Mr Pierce said. This change would enable new businesses to work with consumers to sell their demand reductions into the wholesale market in a similar way to scheduled generation, and be settled in the market at the price available at that time. “Right now, only retailers can offer this service. New businesses wanting to enter the market, and some consumers, say retailers haven’t done enough to encourage demand response. On the other hand, retailers say change is underway and that adding new players will end up costing consumers more,” Mr Pierce said. If adopted, this new approach to wholesale demand response would mean: • commercial and industrial electricity customers can decide to reduce their consumption at peak times and sell this demand reduction into the grid via a new third party demand resource service provider • as prices peak, they will be told to turn off and the aggregator will bid their demand reduction into the market • if generation available to meet our needs is more expensive than the demand reduction available, the demand reduction would be ‘used’ first in place of generation, saving everyone money. “Because we are allowing demand response to set prices in the wholesale market more expensive generation may be likely to be pushed to the back of the queue,” Pierce said. The AEMC draft determination excludes households and small customers from participating in the wholesale market because they would not necessarily be covered by the appropriate energy specific consumer protections. The AEMC has committed to reviewing the need for energy-specific consumer protections over the next 12 months to address what protections may be necessary, and recommends that the ability for households and small businesses to access the mechanism be reconsidered after that review is done. See more details and associated documents here
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