The Australian Energy Market Commission (AEMC) has released a consultation paper and initiated a review into the wholesale demand response mechanism (WDRM) in the National Electricity Market (NEM).
The WDRM, which commenced operation in October 2021, aims to enhance the flexibility and reliability of the NEM by allowing demand response to bid directly into the wholesale market as a substitute for generation.
Demand response refers to the ability of energy users to temporarily reduce or shift their electricity consumption during periods of high demand or system stress, helping to balance the grid without the need for additional generation.
AEMC Chair, Anna Collyer, said the review is timely given the AEMC’s recent work on two-sided market solutions.
“The AEMC’s work through integrating price responsive resources mean that there are new opportunities for both energy suppliers and users to participate in ways that weren’t possible before,” Ms Collyer said.
“Our review will ensure that the market is set up to ensure that the demand side, from households to large customers, are able to participate in the market and be rewarded for their participation.”
The consultation paper seeks stakeholder feedback on whether recent regulatory developments have influenced the need for the WDRM or if modifications could enhance its effectiveness.
Key considerations include:
- The impact of recent market reforms on two-sided market development
- Whether the WDRM continues to serve its intended purpose given evolving market conditions
- How the WDRM fits within the broader framework of demand-side participation
“Through this consultation process, we want to hear directly from market participants about how the WDRM functions within the context of our evolving energy market,” Ms Collyer said.
“This feedback is critical as we evaluate whether our recent rule changes on unlocking CER benefits through flexible trading and integrating price-responsive resources into the NEM, have created market conditions that complement or potentially overlap with the WDRM’s objectives.”
Submissions on the consultation paper are open until 24 April 2025.
