Australian Energy Market Commission pushes ahead with demand response
A new scheme to entice businesses to shut down energy-intensive machinery at key times could pave the way for a fairer – and cheaper – energy market, the Market Commission says
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Big consumers of electricity such as manufacturers and farms will soon have a market where they can earn money by reducing their energy use when demand is high.
Rule-setting body the Australian Energy Market Commission said on Thursday a “demand response mechanism” would begin in October next year.
The move is intended to lower electricity costs for all consumers by cutting the very high-priced peaks in demand which affect all bills.
While initially limited to big users of energy, the commission said it was a stepping stone to two-sided market where all consumers would be able to actively trade their energy use.
“This means the grid will eventually see much greater benefit from the distributed energy resources used by households, such as solar panels, batteries and electric vehicles,” commission chief executive Benn Barr said.
“Once the two-sided market is up and running, we can retire this wholesale demand response mechanism because it will no longer be needed.
“But taking a stepped approach to consumer participation in the market is cheaper, more practical and safer for households and businesses.”
Larger businesses could more easily anticipate and manage demand and the system would benefit from understanding how to apply the structural change.
State and federal energy ministers backed the change.
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“This is another plank in our plans to deliver cheaper, more reliable and cleaner power to South Australian households and businesses,” SA Energy and Mining Dan van Holst Pellekaan said.
SA has already hosted trials of demand response.
Federal Energy and Emissions Reduction Minister Angus Taylor said cutting peaks was key to cheaper prices.
“The benefits of wholesale demand response will flow through to all households and businesses through lower electricity bills and improved network reliability,” Mr Taylor said.
Three organisations – the Public Interest Advocacy Centre, Total Environment Centre and the Australia Institute – which pushed for a market instead of individual contracts which operate now were disappointed households were not included but welcomed the initiative as helping reduce carbon emissions.