The AER (Australian Energy Regulator) has approved new regulatory sandboxing trials that could pave the way for more large energy users to participate in the National Electricity Market’s WDRM (Wholesale Demand Response Mechanism).
Under the trial waivers, demand response providers VIOTAS and Enel X will be able to include large commercial and industrial sites with multiple grid connection points in the WDRM for up to five years.
The WDRM enables large electricity users to reduce their consumption during periods of high demand in exchange for financial payments. By lowering demand at peak times, the mechanism aims to reduce pressure on the electricity system and place downward pressure on wholesale energy prices.
However, current National Electricity Rules restrict participation to sites with a single connection point to the grid. As a result, many energy-intensive facilities, including manufacturing plants, ports, logistics centres, water treatment facilities and data centres, are unable to participate.
The trial waivers will allow VIOTAS and Enel X to each enrol up to 10 multi-connection-point sites and test new approaches to measuring and verifying demand reductions across those facilities.
Jarrod Ball, Board Member at AER, shared that the trials could help unlock additional demand-side flexibility while providing valuable evidence for future market reforms.
“If successful and scaled, these trials will help reduce the level of investment in the grid needed to manage peak energy demand and put downward pressure on customer bills through reduced wholesale electricity prices,” Ball said.
Ball also shared that the trials will provide practical examples for the AEMC (Australian Energy Market Commission) as it considers a rule change request submitted by Enel X to broaden participation in the WDRM.
According to the AER, allowing both VIOTAS and Enel X to undertake separate trials will encourage competition, increase customer participation opportunities, and generate a broader range of operational data from sites across the National Electricity Market.
Protecting market integrity
The trial approvals include a range of conditions designed to maintain transparency and ensure robust market outcomes.
All participating sites must be endorsed by the AEMO (Australian Energy Market Operator), while the first two trial sites for each provider must be operational within six months.
VIOTAS and Enel X will also be required to submit progress reports to the AER, AEMO and AEMC every six months and publish non-confidential versions of those reports on their websites.
The waivers have been granted through the AER’s regulatory sandboxing function under its Energy Innovation Toolkit. This enables temporary exemptions from specific regulatory requirements where existing rules may be preventing innovative energy market trials from proceeding.
