Wholesale demand response mechanism

AEMO is working with the industry to implement a Wholesale Demand Response (WDR) mechanism in the National Electricity Market (NEM).

AEMO established its WDR implementation program following the AEMC’s determination on the WDR Mechanism rule in June 2020. The rule requires the WDR mechanism to start on 24 October 2021.

How WDR works:

The WDR mechanism allows demand side (or consumer) participation in the wholesale electricity market at any time, however, most likely  at times of high electricity prices and electricity supply scarcity.  ‘Demand Response Service Providers’ (DRSP) classify and aggregate the demand response capability of large market loads for dispatch through the NEM’s standard bidding and scheduling processes. 

The DRSP receive payment for the dispatched response, measured in Mega-Watt hours (MWh) against a baseline estimate, at the electricity spot price.  

AEMO’s WDR program and industry engagement

To deliver the WDR mechanism, AEMO has collaborated with the following organisations:

  • Australian Energy Market Commission (AEMC)
  • Australian Energy Regulator (AER)
  • Energy retailers
  • Large end use consumers (that wish to operate as or engage a DRSP)
  • Consumer advocacy groups
  • Third party providers (that wish to operate as a DRSP)
  • Technology innovators 

Key program activities and information include:

  • AEMO’s WDRM high level-design document, which outlines how greater demand side participation is enabled at the lowest possible cost and with minimal impact to energy retailers’ billing systems and business models.
  • A series of industry engagement and procedure consultations, as well as market system changes in the areas of dispatch, settlement, portfolio management and baselining.
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