Ai Group praises AEMC for acting on call for reform

The Australian Industry Group (Ai Group) has welcomed the Australian Energy Market Commission’s (AEMC) proposed changes to energy rules rewarding industrial energy users for cutting demand at peak times, in what would be a win for all energy users.

“The retirement of old generators and the growth of cheap but variable renewables mean our electricity system needs flexible capacity more than ever,” said Innes Wilcox, Ai Group Chief Executive. “Today most of that flexibility comes from gas-fired generators, but gas is increasingly pricey. We need a mix of other flexible resources too, and demand response — when energy users reduce or shift their consumption to take pressure off the grid — is a terrific option to reduce prices and prevent involuntary outages.

“It can be much cheaper to briefly idle equipment on the demand side, rather than build capacity on the supply side that will be idle most of the time.

“Australia’s demand response potential could create value for everyone, but it has gone largely untapped,” he continued. “One big reason is that in our biggest electricity market the only ways for energy users to make money from demand response have been by taking full exposure to the volatile spot price of electricity — unattractive unless you are a very sophisticated player — or by contracting with their energy retailer.

“Ai Group and Australia’s industrial energy users have been calling for action to unlock demand response for many years.

“The draft rule would shake up the electricity market and turbocharge demand response by letting energy users work with third-party aggregators. There is a lot of nuance in the proposed design, which takes elements proposed by energy users and makes changes intended to protect small users and minimise transition costs, and we will take time to study it. 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,” Willox concluded.

Image credit: ©stock.adobe.com/au/Phuchit Aunmuang