WDR Frequently Asked Questions

  • How does WDR compare to other demand response options?

    Participating in WDR or other demand response is voluntary and every business is different. It requires an ability to schedule plant to reduce demand in accordance with the NEM's dispatch processes. Each business will need to decide or seek advice on whether WDR participation is a good fit for its facility/facilities and load profile/s, as well as consider other demand response options.  Other options include participating in the Reliability and Emergency Reserve Trader (RERT) mechanism, or contractual arrangements for demand response via a retailer or network service provider. The table sets out the features of the various demand response options available in the NEM. 

     

    WDR mechanism

    RERT

    Alternative with retailer or NSP

    Type of mechanism

    Market

    Out of market

    Out of market

    Dispatch timeframes and communication

    Scheduled in 5 min dispatch timeframe through standard bidding and dispatch process.  

    Planned ahead (several hour lead time) through verbal communications and agreement

    Ranges from planned ahead to immediate. Automatic control to verbal comms. 

    Dispatch trigger

    Bid is at or below market price

    AEMO operational decision

    Price or technical service need

    Technical requirements

    Standardised capability assessment through registration to meet obligations of NER and ensure no system security issues

    Procurement-based service provision to meet reliability need

    Procurement-based service provision to meet technical or commercial need

    Market interactions

    Bid information included in PASA and pre-dispatch

    PASA outputs feed into decisions on the need for RERT to protect market

     Information submitted to DSPI portal 

    Settlement & Baselines

    Baselines calculated at NMI level for settlement

    Baselines calculated at aggregated level for settlement

    Up to commercial arrangements

    Dispatch compliance

    Baselines aggregated to DUID level for dispatch compliance assessment

    Aggregated baselines used to assess demand response provided against contractual commitment

    Contract-specific

    Who pays for response?

    Retailer pays for demand response at its NMI

    All Market Customers pay for RERT service

    Contracting party pays for service

    Telemetry

    Established based on size and location

    Large loads typically have telemetry, no additional requirements for RERT

    Contract-dependent

  • What is Wholesale Demand Response (WDR)?

    The Wholesale Demand Response (WDR) mechanism was included in the National Electricity Rules in June 2020 after significant public consultation.

    WDR enables demand side (consumer) participation in the NEM spot market at any time, but it will most likely occur at times of high electricity prices.

    Further information:

  • When can I start participating in WDR?

    To participate in WDR you must be a registered demand response service provider (DRSP). You can begin the DRSP registration and load classification process in late June 2021. The WDR mechanism itself commences in the NEM on 24 October 2021. A DRSP can offer wholesale demand response into the NEM at any time from this date.  

    For further information, see AEMO's WDR program implementation timeline

  • What is a demand response service provider (DRSP)?

    WDR enables customers to sell demand response in the wholesale market either directly or through specialist aggregators. Customers need to decide whether to become a “demand response service provider” (DRSP) or engage a DRSP to act in the NEM on their behalf. 

    DRSPs classify and aggregate the demand response capability of large market loads (WDRUs) for dispatch through the NEM’s standard bidding and scheduling processes. 

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

    From October 2021 DRSPs will also be the category that provides ancillary service load, replacing the market ancillary service provider category.

  • How are Market Ancillary Service Providers (MASPs) affected by WDR?

    Market Ancillary Service Providers (MASPs) deliver market ancillary services by offering a customer’s load, or an aggregation of loads into FCAS markets. Under the WDR Rule, MASPs:

    • become DRSPs on 24 October 2021
    • can apply to AEMO for approval to classify load as a wholesale demand response unit from June 2021.
  • What is a wholesale demand response unit (WDRU)?

    A Wholesale Demand Response Unit (WDRU) is a single or an aggregation of demand-responsive, controllable market load connection point(s) within a NEM region.  WDRUs need to be identified as eligible (a ""qualifying load""), classified, scheduled, and dispatched.

  • How is a WDRU different from being a scheduled load?

    A scheduled load is continually dispatched and must adhere to targets on absolute consumption, whereas a WDRU is only required to meet a reduction in  consumption target (ie a demand response) when it is dispatched to provide WDR by reducing its consumption from, or generating into, the grid.  Whereas a scheduled load will have a contiguous stream of dispatch targets that establish the absolute load being consumed at all times, the WDRU will most likely bid into the market so that it is dispatched to reduce consumption against its typical consumption profile when the price is high.

    The difference is illustrated in the table.  In this example, there are two market loads each with a typical load of 10 MW but one is a scheduled load and the other a WDRU.  The scheduled load will consume at 10 MW when dispatched at 10 MW and consume at zero when dispatched at zero. The WDRU will do what it normally does when dispatched at zero (typically consume 10 MW) however, when dispatched by 10 MW it will reduce to zero.

     

    Scheduled load

    WDRU

    Typical load

    10MW

    10MW

    Maximum responsive component (MRC)

    n/a

    10MW

    Consumption when dispatched at 10 MW

    10MW

    0MW

    Consumption when dispatched at 6MW

    6MW

    4MW

    Consumption when dispatched at 0MW

    0MW

    10MW

  • What loads are eligible to participate in WDR?

    Eligibility to participate in WDR is dependent on a load's size and its predictability: 

    • Broadly, only "large customer" loads are eligible to participate in WDR, however aggregated "small customer" loads may be eligible in certain circumstances (see next FAQ). The thresholds for what constitutes a "large customer" is different from state to state, as set out in the table. 
    • Loads also need to be sufficiently predictable so a baseline can be established. WDR settlement and dispatch performance are both measured against a load's baseline.

    Jurisdiction

    Definition of Large business customer (by annual electricity consumption)

    Reference

    QLD

    >= 100MWh

    National Energy Retail Law (Queensland) Regulation 2014 - Schedule 4
    Same meaning as National Energy Retail Law

    NSW

    >= 100MWh

    National Energy Retail Law (Adoption) Regulation 2013

    ACT

    >= 100MWh

    Independent Competition and Regulatory Commission (Price Direction for the Supply of Electricity to Certain Small Customers) Terms of Reference Determination 2014
    Same meaning as National Energy Retail Law

    VIC

    >= 160MWh

    Victorian Energy Retail Code

    SA

    >= 160MWh

    National Energy Retail Law (Local Provisions) Regulations 2013 – Reg 5

    TAS

    >= 150MWh

    National Energy Retail Law (Tasmania) Regulations 2012

  • What loads can be aggregated under the WDR mechanism?

    Load types eligible for WDRU aggregation are set out in the table. Note that aggregations may only comprise of WDRUs that are located in the same NEM region.

    Load type

    Classify/ aggregate as WDRU?

    Comment

    Small customer NMI

    No

    NER 2.3.6 (m)(1)(iii)

    Small customer NMIs are generally not able to be classified or aggregated as WDRUs.

    Aggregated small business customer NMIs

    Yes

    NER 2.3.6 (m)(2)(ii)

    • Small customer NMIs can only be classified and aggregated as WDRUs where a retail customer who is a business customer under the NERL has a NERR 5(2)(a) agreement with its retailer to aggregate its premise loads. This has the effect of its total load corresponding to that of a large customer.
    • As part of the application to classify/aggregate these small NMIs as WDRUs, AEMO will require a declaration confirming that a NERR 5(2)(a) agreement applies to them.

    (NERR jurisdictions only: NERR do not apply in Victoria)

    Large customer NMI

    Yes

    NER 2.3.6 (m)

    Large customer NMIs can be classified and aggregated as WDRUs.

  • What is the maximum responsive component (MRC)?

    Each WDRU has a maximum responsive component (MRC) determined through the WDR classification process. The MRC is scheduled and dispatched through the standard NEM bidding and dispatch processes to provide a load (or demand) reduction. The MRC of each WDRU is the portion of the load at the connection point(s) which is controllable and able to provide the demand response in accordance with dispatch instructions. It may or may not be the total load of the WDRU’s connection point. 
    An aggregation of WDRUs also has a MRC value (DUID-Level MRC) that is an item of bid and offer validation data under NER Schedule 3.1. Note also that the MRC 

    • is a bid cap at the DUID level
    • caps settlement at the NMI level.

    For further information see Figure 1 and Figure 2, WDR high level design

  • What is the minimum load I can have for WDR?

    It depends. There is no lower size limit for individual loads within a WDR aggregation, so long as they are classed as ‘large’ customers (jurisdiction dependent).  However, the dispatchable unit (either a single NMI or aggregation) must be a total of 1MW. This is because the dispatch engine (NEMDE) operates in integers.

  • Does "behind the meter" generation count as wholesale demand response?

    The WDR mechanism in the National Electricity Rules (NER) allows for WDR to be provided by behind-the-meter generation. The Australian Energy Market Commission’s WDR determination and rule was explicit that reduction in load or increase of export at a market load connection point is eligible to provide WDR.  

    Note that the installation of behind-the-meter generation is subject to the connection requirements of the relevant distribution network service provider (DNSP) and, where applicable, the NEM registration requirements (see details regarding registration and exemptions).

  • What are baselines and why are they used for WDR?

    A baseline is the counterfactual energy amount for the WDRU that is dispatched for demand response. Generally, baselines represent an estimate of the consumption per trading interval during a day, based on a history of like days in the near past.

    The demand response settlement process requires the establishment of a baseline for each WDRU. Under the NER, AEMO must develop:

    • One or more baseline methodologies (BLMs)
    • Related baseline settings
    • Baseline methodology metrics for eligibility/compliance testing 
  • How are baseline methodologies developed and applied?

    AEMO's approach is to develop one baseline methodology for the start of WDR that will include weekday/weekend options. This approach:

    • Minimises cost and time to market
    • Does not preclude the development of further baseline methodologies in the future
    • Aims to balance accuracy, simplicity, and integrity.

    The process for development of new baseline methodologies will be set out in the WDR Guidelines

    For further information see the Baseline Eligibility Compliance and Metrics Policy (under development). This document establishes the methodology by which AEMO will determine baseline eligibility and compliance under the WDR mechanism and sets out the thresholds for baseline compliance metrics.

  • There are many phrases describing different aspects of baselines. What do these all mean?

    Term

    Description

    Baseline methodology

    Methodology to determine a baseline for a WDRU.

    Baseline settings

    Set parameters that allow the BLM to be applied to different WDRUs (i.e. qualifying days, baseline window, adjustment window, weekday/weekend etc).

    Baseline methodology metrics

    Parameters (i.e. accuracy/bias) used to assess a WDRU baseline for eligibility and compliance.

    Accuracy

    How closely a baseline methodology predicts actual loads in the sample.

    Bias

    The systematic tendency of a baseline methodology to over- or under-predict actual loads.

  • Can the maximum responsive component be changed?

    Yes, processes to amend the MRC for either an individual WDRU or an aggregation of WDRUs will be set out in the WDR Guidelines. In the case of the MRC applying to an aggregation, this requires advance notice as it is an item of bid and offer validation data.

  • What systems do I need to participate in WDR?

    The WDR mechanism has been intentionally designed to schedule demand side facilities into the NEM dispatch processes.  This service will be provided by a market participant, known as a demand response service provider (DRSP), that will require:

    • knowledge of the NEM market and systems 
    • operational sophistication to manage WDR units according to the relevant rules, policies and procedures.

    Every business is different and needs to conduct its own analysis on the costs/benefits of WDR participation vs other types of demand response.  For WDRU bidding and dispatch, participants can either:  

    • Become a DRSP and set up the required systems to bid and receive dispatch instructions, or  
    • Contract a 3rd party DRSP to manage WDR bidding and/or dispatch on their behalf.

    For an overarching view of how market participants interface with electricity market systems, see the Participant IT interfaces web page, particularly: 

    Likely system requirements for DRSPs are set out in the table. 

     

    Description

    MarketNet

    Any access to AEMO’s market systems requires a data network connection to MarketNet. This is the first step in implementing your access to AEMO’s market systems.

    MSATS

    MSATS is used for NEM energy settlements by determining energy flows from generators and retailers. MSATS does not determine the cost of energy.
    MSATS capability is required for B2M (business to market/AEMO) and potentially B2B communications for the NMIs a DRSP is associated with.

    B2B e-hub

    B2B communications in the NEM are mainly administered through the B2B e-hub (an area of MSATS functionality). The B2B e-hub enables information sharing between the different parties who have an interest in a single customer supply point.

    It is expected that DRSPs will use the following B2B transaction types:

    ·       Receive meter data: Enables DRSP to receive meter data from the MDP/s

    ·       Provide meter data (PMD): Enables DRSP to request meter data from the MDP/s

    ·       Verify meter data (VMD): Enables DRSP to request that meter data is verified by the MDP/s

    Using the B2B e-hub is not mandatory but it is the standard industry form of communication. An alternative is using a bilateral agreement between participants.
    Note that participants need to be accredited before they can transact via the B2B e-hub.  This can be done as part of DRSP registration.

    Wholesale IT systems (EMMS)

    The Energy Market Management System (EMMS) is used to determine the amount and cost of energy to be dispatched. EMMS Markets Portal Applications relevant to DRSPs include:
    • Bid Submissions (bidding)
    • Settlements Direct
    • NEM Prudential Dashboard
    • NEM Prudential Forecast
    • Credit Support
    • Market Info

    Data Interchange

    Data interchange (DI) is a set of cooperating applications to replicate data between AEMO’s Wholesale Market Systems and registered participants' RDBMS conforming to the Electricity and/or Gas Data Models.
    AEMO recommends participants use the Data Interchange software (supplied by AEMO) to automate receiving and storage of the subscribed reports from Data Subscriptions.

    Austraclear

    AEMO acts as a clearing house for a number of energy markets, and facilitates the transfer of money between AEMO and participants. This market settlement function typically involves participants who receive goods and services making payment to AEMO, and AEMO subsequently making payment to participants who provide goods and services.
    To ensure the timely, irrevocable and transparent management of high value payments, AEMO uses the Austraclear service, provided by the Australian Securities Exchange (ASX).  Participants intending to operate in any of the energy markets are required to apply to the ASX for registration to Austraclear.

    Portfolio management system (under development)

    The new Portfolio Management System will allow DRSPs to manage their portfolio and submit new classification and aggregation requests.
    The Portfolio Management System is under development and its external-facing portal is expected to be operational by October 2021. AEMO will hold a workshop for participants in September 2021 on how to use the portal.
    Note that initial registration, classification and aggregation will be by application to AEMO's registration team from late June 2021. However once registered, the new Portfolio Management System will allow DRSPs to manage their portfolio and submit new classification and aggregation requests.

    Demand side participation portal

    AEMO has developed a data portal for participants (including DRSPs) to submit their Demand Side Participation (DSP) information in accordance with the Demand Side Participation Information Guidelines.

    The DSP data portal sits on MarketNet.

     

     

     

     

     

     

  • Why does my site need telemetry when AEMO doesn’t currently see my changes in demand?

    To perform its power system operation functions, AEMO uses a combination of real-time measurements and estimates to provide it with the necessary operational awareness of conditions in the power system. In the case of WDR, AEMO will require data on the quantity of WDR being provided by each DUID in the operational forecasting and central dispatch processes. 

    Real-time telemetry data should be provided where:

    • there is no suitable estimate available that can be used; or
    • the real-time measurement is expected to be more accurate or provide greater operational awareness than the available estimate, and this improvement is of critical importance for power system operation.

    The WDR Guidelines (under consultation) will set out the thresholds above which telemetry will be required, and also the process to seek an exemption from having to install telemetry.

  • How and when do I register to become a DRSP?

    AEMO expects that DRSP registrations will open in June 2021 and intends to hold an information session in May 2021 to prepare businesses for the registration, classification and aggregation processes. Initial registration, classification and aggregation will be by application to AEMO's registration team. However once registered, the new Portfolio Management System (under development) will allow DRSPs to manage their portfolio and submit new classification and aggregation requests.

    From June 2021, you may apply to register as a DRSP once you are ready to apply to classify one or more loads as WDRUs or ancillary service loads (ASLs). 

    Note that under the WDR Rule, Market Ancillary Service Providers (MASPs):

    • become DRSPs on 24 October 2021
    • can apply to AEMO for approval to classify load as a wholesale demand response unit from June 2021.
  • How do I classify loads?

    AEMO expects that WDR applications will open in June 2021 and intends to hold an information session in May 2021 to prepare businesses for the registration, classification and aggregation processes. Initial registration, classification and aggregation will be by application to AEMO's registration team. However once registered, the new Portfolio Management System (under development) will allow DRSPs to manage their portfolio and submit new classification and aggregation requests.

  • How do I aggregate/disaggregate loads?

    AEMO expects that WDR applications will open in June 2021 and intends to hold an information session in May 2021 to prepare businesses for the registration, classification and aggregation processes. Initial registration, classification and aggregation will be by application to AEMO's registration team. However once registered, the new Portfolio Management System (under development) will allow DRSPs to manage their portfolio and submit new classification and aggregation requests.

  • What is the "Portfolio Management System"?

    The Portfolio Management System is for DRSPs to:

    • View their portfolio of WDRUs & ASLs
    • Submit new application requests for AEMO's approval such as:
    • Classify new NMIs
    • Declassify existing NMIs
    • Aggregate
    • Disaggregate
    • Update baseline methodologies and parameters
    • Request to reinstate a NMI following suspension due to non-compliance.
    • Continue application(s) from draft
    • View the status of submitted requests
    • Request to withdraw submitted requests
    • Self-assess baselines associated to a NMI or by a Portfolio
    • Identify their NMI as unavailable due to operational issues.

    The Portfolio Management System is under development and its external-facing portal is expected to be operational by October 2021. AEMO will hold a workshop for participants in September 2021 on how to use the portal. 

    Note that initial registration, classification and aggregation will be by application to AEMO's registration team from late June 2021. However once registered, the new Portfolio Management System will allow DRSPs to manage their portfolio and submit new classification and aggregation requests.

  • Can I temporarily suspend a NMI from an aggregation?

    AEMO is developing a process whereby a DRSP will be able to set a NMI as temporarily unavailable and amend the ""bid available"" capacity accordingly. AEMO is working through this to assess how it might be implemented and the conditions where this is appropriate.

  • Can a WDRU participate in the FCAS markets?

    By way of context, currently Market Ancillary Service Providers (MASPs) are the registered participant type that can bid ""ancillary service loads"" (ASLs) into the contingency (but not the regulation) FCAS markets. 

    Under the WDR Mechanism Rule, MASPs are to be renamed DRSPs (clause 11.125.9). However, the WDR mechanism itself is only about energy dispatch, not the provision of FCAS. Please also note that:

    • Where a DRSP wants a load to participate in both WDR and FCAS, it will need to apply to classify the load as both a WDRU and an ASL.
    • NEMDE will not co-optimise DRSP bids for FCAS and energy.
    • A market load connection point classified as a WDRU and an ASL by a DRSP will be represented in separate dispatchable units (one offering energy and one offering contingency FCAS).
    • A market load that is classified as a WDRU by a DRSP can only be classified by that same DRSP as an ASL and vice versa.  Where two DRSPs have classified ASL at the connection point, that connection point is not available for WDR classification.
  • Can I participate in WDR if my load can't respond within a 5-minute dispatch interval?

    Yes. There are mechanisms that can be used where facilities (generators or loads) are not sufficiently flexible to respond to 5-minute dispatch timeframes, including:

    • Ramp rates
    • Fast start inflexibility profile (FSIP) bidding 
    • Other bidding strategies, as determined by the DRSP
  • Why do DRSPs have to provide credit support when they are being paid to reduce demand and not buying energy?

    The WDR mechanism allows customers to gain access to NEM spot prices when they are dispatched for demand response. In developing the WDR, the AEMC decided that this exposure should be bidirectional i.e. that WDR settlement quantities should not be floored at zero. Consequently, the NER settlement equations will result in ""negative"" settlement quantities where:

    • - a WDR NMI is dispatched and 
    • - its metered consumption is above its baseline quantity or a positive demand response is provided at a negative price

    AEMO has no discretion to adjust or deviate from these settlement equations. The requirement for credit support directly results from this risk of negative settlement.

    It is important to note that no WDR settlement occurs if there is no dispatch instruction. Dispatch is based on bids, and DRSPs can bid their capacity to reflect their availability and the pool price at which they are willing to provide WDR.

  • Why do WDRUs need to have 5-minute metering?

    Five-minute metering is necessary for settlement and dispatch conformance monitoring. Five-minute data are required because settlement and dispatch are 5-minute processes.  Therefore, baselines and demand response must also be calculated and assessed in 5-minute intervals against actual 5-minute consumption data.

  • What WDRU information can I see and in what timeframes?

    The information you can see depends on your role in the NEM and your relationship with the WDRU. 

    For specific information on WDR data access for DRSPs, retailers, DNSPs, market participants and the general public see: Access to WDR data and information 
    - Data-sharing arrangements are also described in the WDR Guidelines

  • How are embedded networks affected by the WDR mechanism?

    NMIs on embedded networks can generally participate in WDR so long as they meet all the WDR requirements.  The WDR Rule (2.3.6(m)(1)) provides that embedded network loads qualify for WDR where: 

    (i)  the load comprises... a parent connection point in respect of all its associated child connection points that are not market connection points;
    (ii) if the connection point is a child connection point, it is also a market connection point.

  • What changes are being made to AEMO’s retail systems?

    WDR changes to AEMO's retail systems are modest and mainly relate to adding the DRSP participant type and related attributes (see table). There are no asexml schema changes required to implement WDR.

    Retail lifecycle element

    WDR impact

    Summary

    NMI creation

    NMI and relevant standing data will be created by LNSPs. A NMI must exist before it can be classified as a WDRU

    No change

    NMI Discovery/ Standing Data

    NMI Discovery will be performed just like it is today with a DRSP role returning in the discovery if a DRSP has been assigned. DRSPs will have access to standing data.

    • AEMO to create new DRSP role
    • DRSP role will be discoverable in Type 2 NMI Discovery
    • DRSP will be entitled to access standing data as per CATS Procedures

    NMI Role assignment

    DRSP role assignment will be performed by AEMO using the CR5101

    AEMO to assign DRSP role to relevant WDRU NMIs

    Metering changes

    Metering changes will happen as per today's processes. DRSPs will be notified upon completion if they have a relationship with the NMI

    No change

    Role changes

    Role changes will happen as per today's processes. DRSPs will be notified upon completion if they have a relationship with the NMI

    No change

    NMI re/de-energisation 

    Re-en/de-en processes will happen as per today's processes. DRSPs will be notified of NMI status changes via completion of change requests if they have a relationship with the NMI.

    No change

    NMI extinction

    Extinction processes will happen as per today's processes. DRSPs will be notified of NMI status changes via completion of change requests if they have a relationship with the NMI.

    No change

    Removal of DRSP role in MSATS

    DRSP removal will be processed by AEMO by assigning a participant id that reflects that no DRSP is assigned to the NMI.

    AEMO to create a participant ID to replace the DRSP participant ID showing that a DRSP no longer exists and the NMI is no longer a classified WDRU.

  • What is the settlement mechanism for WDR?

    The FRMP (retailer) at the WDRU funds the demand response. During a demand response event, the retailer will be settled with respect to both the energy market settlements (based on metering data) and the baseline energy level. 

    To ensure that the retailer is compensated following a demand response event, a wholesale demand regional reimbursement rate (WDRRR) will be calculated and charged to the DRSP based on the energy difference between the baseline and the metered energy. This amount will be paid to the retailer. The WDRRR is intended to reflect the cost of the electricity the FRMP is liable to purchase in the wholesale market which is not consumed by, and therefore not charged to, the customer.

    Further information

    Section 2.2.2, WDR High level Design

  • When do I get paid for the demand response I provide?

    Payment is in accordance with NEM settlement time frames. See the NEM settlement calendars and related settlements information for details.

  • How will I be notified when my customer is dispatched for WDR?

    AEMO has existing obligations to publish all dispatch instructions and other dispatch data on day D+1, under NER 3.13.4(p) and (q). Retailers will be able to access these dispatch instructions from AEMO's website and through the EMMS Portal.

    It should be noted that AEMO will not be able to advise the retailer on day D+1 of the dispatch quantity for each individual NMI for which it is the FRMP. Dispatch instructions will be issued at the aggregated level (where applicable), and the DRSP will choose how it apportions a dispatch instruction between the constituent WDRUs, noting that these may be associated with different retailers.

  • How does my network connection agreement relate to WDR?

    Network connection agreement terms and conditions are set by the relevant network service provider. To operate on a network, generators and loads must comply with the terms of their network connection agreement. Market participants (including those who undertake WDR) are required to operate in accordance with their network connection agreement, as well as comply with all their NER requirements, at all times.

  • There is too much jargon! Help?

    You are right. Fortunately, there are some useful web pages to point you in the right direction:

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