Melbourne, 25 October 2021 – In a major reform to Australia’s energy market, the wholesale demand response mechanism (WDRM) commenced trading today, with Enel X leading the charge as the first to offer demand-side energy resources into the wholesale electricity market. The WDRM allows demand response to be sold directly into the electricity market to help balance supply and demand at critical times.
Enel X is the operator of Australia’s largest virtual power plant (VPP)1 and a pioneer in the country’s demand response markets. Enel X was registered as the market’s first demand response service provider last Thursday, enabling it to offer its commercial and industrial customers’ energy flexibility to the market at critical times. Participating customers will compete alongside traditional power stations in the spot market and be paid to reduce their power consumption when called upon.
Jeff Renaud, Head of Enel X Asia and Oceania, said “Today marks a huge milestone for the wholesale market, and an opportunity for businesses to earn a significant new revenue stream while supporting Australia’s most affordable path to decarbonisation. Progressive organisations recognise the importance of developing demand response capabilities to support their sustainability objectives and are seizing this opportunity. The market urgently needs new, flexible resources to balance renewables and replace retiring coal generation. Demand response is the most cost-effective resource available, and we are working to maximise its use to ensure affordability and reliability of power during the renewable energy transition.”
The WDRM also has an important role to play in Australia’s renewable energy transition, as it is a long-term market mechanism that will incentivise the development of new demand response resources. The Australian Energy Market Operator (AEMO) estimates that we will need to build up to 19GW of new dispatchable resources by 2040 to balance renewable power and replace retiring coal-fired power stations2.
Each MW of demand response in the WDRM will lessen the need for investment into other more expensive resources, supporting Australia’s shift to a low carbon energy future.
Enel X’s entry into the WDRM expands on the company’s longstanding experience helping businesses to provide demand response into different markets, including the frequency control ancillary services (FCAS) markets. Today, Enel X’s VPP has registered in excess of 250MW for participation in the FCAS markets, and AEMO has noted the positive impact that this demand response has had on market outcomes3. Enel X intends to work with its business customers to replicate this FCAS success in the WDRM.