One of the most important aspects of three annual reports released by the Australian Energy Market Commission (AEMC) last week was that they showed a pronounced shift towards a wholesale demand response mechanism.
Among the key suggestions included in the energy rule maker’s Reliability Frameworks Review was to give consumers the ability to contract with multiple retailers or aggregators at the same connection point, establishing multiple trading relationships that would open up more opportunities for consumers to offer their demand response in the wholesale market.
The idea of engaging solar+storage system owners through demand response, which would require from consumers to adjust their consumption in the periods of peak demand or excess supply, is not new.
It aligns with AEMO CEO Aubrey Zibelman’s address earlier this year about bringing electricity demand closer into line with supply as a way to start driving down prices.
By becoming more active, the demand side would assume more control over the energy market, which is currently supply-oriented, putting a downward pressure on electricity prices through increased competition.
Furthermore, the AEMC has called for for a voluntary, short-term forward market to allow trading of financial contracts closer to real time and so increase price certainty for demand response.
Another recommended action presented in the Frequency Control Frameworks Review final report was making further changes that might be needed to improve the stability of electricity supply in the future once evidence is in from AEMO trials, such as on integrating virtual power plants.
The mission of VPPs is to take pressure off the network and help reduce volatility in wholesale prices, exploring the potential of increasing amount of distributed energy resources such as solar PV systems, battery storage and electric vehicles on the grid.
“We recognize the need to take evidence from trials currently underway. We will also continue to adapt the regulatory framework to the sector’s experience and growing knowledge about innovations like demand management options or the ability of virtual power plants to improve the stability of electricity supply,“ said AEMC Chairman John Pierce.
At the end of the day, the report is a list of recommendations, which are to be subjected to further scrutiny and eventually adopted. Time will tell if these suggestions will result in rule changes.