Australia is headed towards a “completely new” two-sided energy market because of digital technology and consumer power generation, according to the Australian Energy Market Commission (AEMC), the statutory body which governs the national electricity and gas markets.  

In the new “wholly connected” market consumers will be rewarded for buying and selling energy in real time, a threat to Australia’s long standing large energy generators, according to a discussion paper released on Thursday by the AEMC.

AEMC chairman, John Pierce compared the shift to that of digital platforms eBay and Airbnb’s disruptive impact on their respective sectors. 

“Technology is driving broad scale decentralisation,” Pierce said.

“More people are interested in do-it-yourself-generation and are motivated to explore energy efficiency.

“The days of a relatively small number of centrally controlled, big generators dominating the market are going.” 

Set and forget

Pierce said digital technology like smart metres and appliances means consumers or third parties acting on their behalf will increasingly be able to “set and forget” some devices to consume electricity at times of lower prices and export it back when it had the most value.

AEMC chairman, John Pierce.

According to the AEMC the scheduling would help drive down power prices for all consumers and ultimately “less generation and network capacity would be needed in a market with higher levels of consumer participation and responsiveness”.

While the model is a threat to the centralised generation of power by a few large companies, the AEMC said retailers and aggregators have a more certain future provided they adapt to their new role of helping customers act like a “virtual power plant”. 

The AEMC paper, titled How Digitalisation Is Changing The National Energy Market was released by the Energy Security Board (ESB), the group charged with implementing Australia’s chief scientist Dr Alan Finkel’s blueprint for the future of Australia’s national electricity market.  

The ESB expects to consult on specific reform options in early 2020 but Pierce said the market is already in flux. 

“We are on the edge of the next big wave in energy market development. We need to get ready now so we are prepared to realise the benefits which digitalisation will bring … Until now, we have been limited by technology, but digitalisation has progressed to the point where it is time to consider a completely new approach.

“We are starting a new conversation to capture and extend the benefits of digitisation for all energy consumers into the future,” he said.

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