Australian electricity and gas markets – July 2024 Update
07 August 2024
Stakeholders should note the market updates below, and note any impacts on their compliance obligations.
On 25 July 2024, the Australian Energy Market Commission (AEMC) released its draft determination and more preferable draft rule on its Integrating price-responsive resources into the NEM rule change.
This draft rule proposes to allow Virtual Power Plants (VPPs) and other unscheduled price-responsive resources to compete with large-scale generators on the National Electricity Market (NEM) by:
Stakeholders are invited to submit feedback on this draft rule by 12 September 2024.
Electricity is purchased and sold on the NEM through AEMO. AEMO determines the spot price of electricity on the basis of dispatch bids submitted by Generators and Integrated Resource Providers (IRPs).
Unscheduled price-responsive resources have traditionally been excluded from AEMO's dispatch process. They are not appropriately considered when determining how much energy demand needs to be met, how to meet this demand or the price at which it is purchased. However, the proposed dispatch mode provides a mechanism through which market participants can submit bids on the basis of unscheduled price-responsive resources.
Dispatch mode applies exclusively to voluntarily scheduled resources (VSRs). A market participant can nominate a qualifying resource as a VSR with AEMO if the resource falls within the following classifications:
Classification | Registration Category |
Non-scheduled generating unit | Generator, IRP |
Non-scheduled bidirectional unit | IRP |
Non-scheduled connection point | IRP, Market Customer |
Small generating unit | IRP (Small Resource Aggregator) |
Small bidirectional unit | IRP (Small Resource Aggregator) |
The IRP registration category was introduced in the Integrating energy storage systems into the NEM rule change in December 2021. The present draft rule builds on this rule change by further integrating IRPs within AEMO's dispatch process.
Participants that nominate a VSR retain their registration category (i.e. Generator, IRP, or Market Customer) but are also referred to as a voluntary scheduled resource provider (VSRP).
Multiple resources can be nominated under a single VSR if the resources are aggregated. There is no requirement for an individual resource within a VSR to fulfil a dispatch instruction provided that the VSR can fulfil the instruction in aggregate.
The AEMC is expecting the rule change in relation to dispatch mode to commence in November 2026.
The draft rule proposes the following two incentives for VSRPs in addition to those currently available to participants in the dispatch process:
The AEMC's preferred position is for incentive payments to be provided through the Australian Renewable Energy Agency or a government scheme. If these options are not available, the AEMC is proposing a tender process with the following features:
The AEMC is proposing an AU$50 million payment cap over a five-year incentive period.
The AEMC expects the first incentive tender will occur in early 2027.
The draft rule proposes additional reporting and monitoring requirements for the AER and AEMO. These requirements are centred on monitoring and reporting the impacts of unscheduled price-responsive resources. The AEMC has scheduled these reporting guidelines to be published by December 2025.
On 4 July 2024, the AEMC released its draft rule and consultation paper for its Minor changes 2 2024 rule change proposal. The proposal seeks to correct minor errors and make non-material changes to the National Electricity Rules (NER). Stakeholder submissions closed on 1 August 2024.
On 4 July 2024, the AEMC released its draft rule and consultation paper for its Minor changes 2 2024 (Retail) rule change proposal. The proposal seeks to correct minor errors and make non-material changes to the National Energy Retail Rules (NERR). Stakeholder submissions closed on 1 August 2024.
On 4 July, the AEMC released its draft rule and consultation paper for its Minor changes 2 2024 (Gas) rule change proposal. The proposal seeks to correct minor errors and make non-material changes to the National Gas Rules. Stakeholder submissions closed on 1 August 2024.
The AER is seeking feedback on its:
On 25 July 2024, the AEMC announced its Electricity pricing for a consumer-driven future review and released its draft terms of reference.
This review will look at ways to effectively integrate consumer energy resources such as household solar panels and batteries into the wider energy grid.
Stakeholders are invited to submit feedback on the draft terms of reference by 22 August 2024.
On 26 July 2024, the AER released:
AEMO released its Quarterly Energy Dynamics Q2 2024 Report summarising developments in the Australian electricity and gas markets:
On 19 July 2024, the Energy and Climate Change Ministerial Council released their:
On 1 August 2024, the Australian Financial Markets Association (AFMA) published a new AFMA gas addendum for use by market participants.
Authors: Dan Brown, Partner; Dale Gill, Partner; Paul Newman, Consultant; Carl Franzmann, Graduate and Ethan Low, Paralegal.
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.
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