Major reforms, including 5 Minute Settlements (5MS), have been introduced in the National Electricity Market (NEM).
The amendments aim to aid Australia’s energy transition and improve market efficiency, competition and consumer benefits. Major reforms include 2-day retail switching and Wholesale Demand Response (WDR).
These reforms are the culmination of rule changes, innovative digital systems and extensive stakeholder engagement and partnership.
CEO of the Australian Energy Market Operator (AEMO), Daniel Westerman, said the reforms will create better outcomes for market participants, consumers and a more efficient energy sector.
“From 1 October, 5MS will reduce the wholesale electricity spot market settlement period from 30 minutes to 5 minutes, matching the electricity dispatch periods,” Mr Westerman said.
“5MS provides better price signal for investment in fast response and flexible technologies, such as batteries and gas-peaking generation.”
AEMO will also report on unaccounted for energy (UFE) values as part of the Global Settlement (GS) ‘soft-start’ from October. Full GS changes will be implemented on 1 May 2022.
At the start of October 2021, the time for consumers to change electricity retailers will reduce from up to 3 months to 2-day transfers.
Following a recommendation in the ACCC’s Retail Electricity Pricing Inquiry report, AEMO developed a new framework to facilitate faster and more efficient switching.
WDR will be available from 24 October 2021. This will enable large commercial and industrial businesses to bid and schedule a reduction in electricity consumption for payment.
A new market participant category will be introduced to coordinate and offer ‘demand response’ into the NEM.