Rule Change: Open
Overview
On 15 February, 2024, the Australian Energy Market Commission (AEMC) published modelling results indicating $1.5-$1.9b in potential cost reductions (net present value between 2025 and 2050) from undertaking reform to integrate price-responsive resources.
The Australian Energy Market Operator (AEMO) proposed a voluntary mechanism to allow unscheduled price-responsive resources, such as virtual power plants, to participate in scheduling processes. Under the AEMO proposal, retailers and aggregators could use the mechanism to improve demand forecasts and participate in dispatch.
Currently, these resources, and their response to market price signals, are not fully integrated into the planning and operation functions within the National Electricity Market (NEM). As such, they are not appropriately considered when determining how much energy demand needs to be met, how to meet this demand or the price at which it is purchased.
Over time, the integration of these resources would reduce total system costs and, therefore, decrease prices for all consumers.
AEMO’s rule change request is part of a package of reforms being progressed by the market bodies to realise the benefits of CER for consumers.
Consultation paper
A consultation paper was published in August 2023. Submissions in response to the consultation paper closed on 14 September 2023 and 34 submissions were received.
Update paper
On 14 December, 2023, we published an update paper. It provides an overview of work to date and the steps that we propose to take in the first half of 2024 to progress this rule change towards a draft rule.
Benefits modelling
On 15 February, 2024, we published modelling of the benefits associated with integrating price-responsive resources. The findings suggest a potential cost reduction ranging between $1.5 to $1.9b dollars (net present value between 2025 and 2050) through reform to integrate these resources. These substantial figures underscore the significance of progressing with the rule change promptly.
Forum and Technical working group
On 19 February, 2024, the AEMC held a public forum to provide an overview of the Commission's work to date on the rule change, including 'size of the prize' benefits modelling that was released on 15 February. The slides from the forum are attached.
On 21 February, 2024, we also commenced our technical working group to consider the design of visibility and dispatch solutions. The slides and minutes from these meetings will be uploaded through the process.
Draft determination
The draft determination has been extended to 25 July 2024 because the rule change deals with a number of complex and interrelated issues. Most importantly, the rule change is trying to facilitate and incentivise the integration of virtual power plants, likely to be made up of millions of devices, in the national electricity market. To develop robust solutions to these complex issues the Commission needs time to thoroughly engage with stakeholders and conduct extensive analysis.