The Australia Institute, Public Interest Advocacy Centre and Total Environment Centre have welcomed a demand response reform of Australia’s electricity market that will improve reliability and reduce prices for consumers.

The groups also welcome the AEMC’s decision to maintain the early 2021 implementation date for the rule which they had advocated for.

The three organisations said they are disappointed the AEMC has closed the door on allowing households to participate in the mechanism.

“Wholesale demand response is a critical reform that will bring much-needed benefits to consumers, and a key part of a secure, zero-carbon energy system,” said Craig Memery, head of energy policy at the Public Interest Advocacy Centre.

Australia Institute energy lead Dan Cass said, “Big energy users like factories and farms will be able to earn money by saving energy during heatwaves and at other times when electricity prices are high. This will push down prices for all consumers, improve reliability and help Australia safely retire our 20 remaining coal-fired power stations.”

Total Environment Centre energy market advocate Mark Byrne said the three groups will continue to push for households and small businesses to be able to reduce their energy costs by participating in the demand response market.

The groups will continue to work with the AEMC to implement the demand response mechanism in 2021 in a way that maximises benefits to consumers and seek alternative means of ensuring households can participate in demand response.

They said it is positive the AEMC did not delay implementation of the rule despite pressure from incumbent coal generators and retailers who have used covid-19 to lobby to push back NEM reforms that would benefit consumers and reduce emissions.

Enel X has been providing demand response services to Australian industry for years and managing director Jeff Renaud said the new mechanism will open up opportunities for investment in demand response, provide customers with more choice and lower prices, and help activate the significant amount of latent demand response capability in the NEM.

“We are particularly pleased to see that the mechanism will be implemented in October 2021,” Renaud said. “This provides enough time sort out all of the technical details while allowing customers to start benefiting from the reform as soon as possible – and start getting additional, cheap and flexible capacity into the market in time for the 2021-22 summer.”

The full benefits of the mechanism will not be realised until the market moves to five-minute settlement, he said.

Wholesale demand response is a system where energy users are paid to cut their energy use when demand and wholesale prices are high. Participating energy users receive a direct financial benefit and all other consumers benefit from lower wholesale prices as expensive forms of generation are not called on.