AEMC: Consumers to drive competitive energy market

The growth of distributed energy resources in Australian households will require the development of a competitive energy market, a new report has found.

The Distribution Market Model final report, released today by the Australian Energy Market Commission (AEMC), outlines a vision for a competitive ‘distribution market’ that enables consumers to get the most value out of their distributed energy resources.

AEMC Chairman John Pierce said that if, as expected, distributed energy resources continue to become smarter and cheaper, we will see an acceleration in consumer uptake.

Distributed energy resources include battery storage, electric vehicles and smart household appliances like refrigerators and dishwashers, which are connected to the electricity distribution network.

“We need to put consumers in the driving seat – giving them the choice about how to optimise the value of their household’s or business’s energy investments,” Mr Pierce said.

According to the report, customers taking up new technologies should not only be able to use or sell electricity they generate as owners of solar PV currently do, they should also be able to shop around and contract the use of these energy technologies to the highest bidder.

“To achieve this vision, some essential changes to energy markets are already underway,” the AEMC said in a statement.

“This includes the introduction of a competitive market for smart meters and the move to cost reflective tariffs, which provide consumers with more accurate price signals on investing in, and using, distributed energy resources.”

The AEMC said there needs to be better coordination between distribution level markets and the wholesale market to broaden the opportunities for distributed energy resources.

Mr Pierce said his is currently being looked at in the AEMC’s Reliability Frameworks Review but the creation of a distribution level market will also be key part of that coordination in the longer term.

“Distributed energy technologies can provide benefits to consumers, networks and wholesale markets,” he said.

“We need a way to allow consumers and their retail energy service providers to determine where they can get the most value at any point in time.

“Also, more investment in fast response and flexible distributed technologies can make the power system more secure and reliable.

“These technologies can back up the system when the wind stops blowing and the sun stops shining.”

Australian Energy Council chief executive Matthew Warren said under a distributed energy market households and businesses will be able to sell their electrons or the use of their devices like batteries to the highest bidder.

“The AEMC report outlines the importance of having open and competitive energy markets in the 21st century as energy consumers play an expanding role in supplying both energy and services to stabilise the grid,” Mr Warren said.

“Consumers will have increasing control over their energy in the 21st century.

“They will deliver the greatest benefit to the grid and get the best value for their investment in energy technologies if they can shop around in competitive energy markets.

“The AEMC report highlights the importance of allowing energy consumers to work with competing energy service providers.”