Industry group backs AEMC changes to demand response rules

The Australian Industry Group (Ai Group) has backed the Australian Energy Market Commission’s (AEMC) proposed changes to energy rules.

In a statement, Ai Group chief executive, Innes Willox, promoted the suggested changes.

“Our initial reaction, however, is very positive. Energy users demanded, and the AEMC has responded. There is much work to do before a final rule change commences in July 2022, but we are finally back on track,” said Willox.

The changes that are currently being canvassed by the AEMC allow large energy users, such as manufacturers, to sell back unneeded demand into the energy market, at times of peak usage. The change is partly driven by the uptake and lowered cost of renewables, such as wind and solar which produce energy intermittently.

Willox highlighted how this created a need for greater market responsiveness.

“The retirement of old generators and the growth of cheap but variable renewables mean our electricity system needs flexible capacity more than ever. Today, most of that flex comes from gas-fired generators, but gas is increasingly pricy.

We need a mix of other flexible resources too, and demand response is a terrific option to reduce prices and prevent involuntary outages,” said Willox.

According to Willox, demand response has been a mechanism that has been advocated for by industry and manufacturers for almost a decade.

“While a wholesale demand response mechanism seemed all but agreed by Council of Australian Governments (COAG) in 2012, by 2015 it had fizzled out. The Finkel Review listened to energy users and revived the recommendation. Now the Australian Energy Market Commission has also listened and made a draft determination that appears to deliver what Finkel and energy users have sought,” said Willox.

While noting that the proposed design of the scheme has nuance which will require further study, the response from industry’s peak body to changes to electricity rules has so far been positive.