A Path to a Cleaner and More Efficient Australian Energy Market

The Australian Energy Market Commission (AEMC) sought to understand the potential benefits of leveraging flexible Consumer Energy Resources (CER) to reduce system costs and enhance market efficiency. While CER assets like rooftop solar, batteries, electric vehicles (EVs), and smart appliances were becoming increasingly prevalent, their integration into the broader energy system was limited. A key challenge was quantifying how optimally orchestrated CER flexibility could deliver significant cost savings to consumers and the grid. 

The Growing Role of CER in Australia’s Energy Market

Australia’s energy market is undergoing rapid transformation, driven by consumer adoption of distributed energy resources and policy initiatives supporting decarbonization. However, without structured mechanisms to coordinate and optimize CER participation, these assets remain underutilized in the wholesale and ancillary service markets. The AEMC required a data-driven analysis to inform future regulatory reforms that would enable CER to contribute more effectively to grid stability and energy cost reductions. 

Energeia’s Tailored Modelling Approach

To address this challenge, AEMC engaged Energeia to develop a comprehensive analysis of the potential system benefits of unlocking flexible CER to 2050. Our team employed a tailored modelling tool designed to estimate the economic impacts of CER flexibility across multiple value streams, including wholesale energy markets, frequency control ancillary services (FCAS), and network cost reductions. The model simultaneously considered how this load flexibility impacted consumer bills, and leveraged analysis of real-world Virtual Power Plant (VPP) offers to determine CER’s potential role in system-wide cost savings. The tool was developed in collaboration with the AEMC team and involved engaging with industry experts to refine assumptions and ensure alignment with regulatory and market conditions. 

Key Findings: System-Wide Benefits of CER Flexibility

Energeia’s analysis revealed that unlocking CER flexibility could potentially generate $14 billion in annual system benefits by 2050. Most savings stemmed from reduced wholesale energy costs, with FCAS providing additional value, particularly in the early years of implementation. Residential and commercial batteries accounted for 60% of the total potential benefits, followed by EV charging and vehicle-to-grid (V2G) solutions. While orchestrated CER provides system-wide benefits, consumers could face increased retail bills without tariff adjustments. The study highlighted the need for cost-reflective pricing to align consumer incentives with grid-optimal energy usage patterns for flexible loads. 

Insights for Future Regulatory Frameworks

Energeia’s findings provided AEMC with a strong evidence base to shape future regulatory frameworks supporting CER integration. The project’s insights are instrumental in: 

• Designing Retail Tariff Reforms – Ensuring consumers are fairly compensated for flexible CER participation 

• Expanding Market Access for Third-Party Aggregators – Creating a more competitive ecosystem for demand response and VPP services 

• Reducing Barriers to Market Participation – Addressing technical and regulatory hurdles that limit CER owners’ ability to monetize their assets 

Energeia’s rigorous analytical approach and stakeholder engagement capabilities positioned us as a trusted partner in shaping the future of energy markets. By unlocking the full potential of CER flexibility, we are enabling a cleaner, more efficient, and consumer-friendly energy transition.