The Justice and Equity Centre made a submission to the Australian Energy Market Commission’s (AEMC) Review of the Wholesale Demand Response Mechanism (WDRM).
We argued that the WDRM is an important component of a 21st Century energy system and will be an ongoing element of the NEM long into the future. We criticised the AEMC’s position that the WDRM is a short-term feature that will soon be made redundant by a move to a ‘two-sided market’ in the NEM.
Relatedly, we argued that the WDRM cannot be evaluated on the basis of our experience of it thus far as key actions (or inactions) by the AEMC and the Australian Energy Market Operator (AEMO) have dissuaded investment by demand response providers and take-up by consumers. Key amongst these are the AEMC’s ongoing insistence that the mechanism is temporary and AEMO’s failure to rapidly expand the available baselines in the mechanism or expand the eligibility criteria.
We argue that the consultation paper accompanying the review is extremely narrow in its treatment of the benefits of the WDRM and furnish the AEMC with a list of considerations more in line with the benefits considered by the AEMC for other such mechanisms and in line with the National Electricity Objective.
Finally, we propose three changes to the design of the WDRM aimed with increasing the value to consumers: expanding to include small users and households, moving to enable symmetrical demand response (compensating users or storage to demand load in order to manage minimum system load issues), and streamlining the process of baseline additions.
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