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Wholesale demand response to help lower costs and strengthen energy grid

11 June 2020

A new rule in the National Electricity Market (NEM) will help lower energy costs and improve electricity reliability for all customers at times of peak demand on the electricity grid.

The Australian Energy Market Commission (AEMC) has published its final rule to support wholesale demand response in the National Electricity Market. 

The new rule will give smelters and other important large energy users greater control over their energy use, and will allow users to be paid when they lower their demand during system events.

Minister for Energy and Emissions Reduction Angus Taylor said: “This reform will help avoid spikes in electricity demand that can increase prices, and can cause unexpected blackouts.

“This is a great opportunity to strengthen energy intensive industries, like smelters, by rewarding them for the role they play in making the grid affordable and reliable. 

“The benefits of wholesale demand response will flow through to all households and businesses through lower electricity bills and improved network reliability.

“Lower electricity costs on small businesses and industry means Australians have more money to invest, expand and grow jobs - and this is particularly important as businesses recover from COVID19.”

This rule represents a significant reform for the NEM, making wholesale demand response possible. 

Demand response is reducing, or changing the timing of electricity used in response to market conditions. By capitalising on the potential of large energy users to shift their electricity consumption, the wholesale demand response mechanism can help to manage pressure on the grid.

The mechanism is due to commence on 24 October 2021. 

The AEMC’s final rule and determination is available at aemc.gov.au/rule-changes/wholesale-demand-response-mechanism 


Media contact:
Minister Taylor's office 02 6277 7120