Integrating Price Responsive Resources into the NEM (IPRR)

Background

There are a wide range of energy resources (for example, batteries) that enable consumers or parties acting on their behalf to respond to spot prices. The increasing number and magnitude of these unscheduled resources is a significant opportunity for consumers, retailers and the broader electricity system. However, this responsiveness isn’t currently effectively integrated into the NEM. It is not directly considered when determining the level of demand, how best to meet this demand or the spot price.

To address this, in January 2023, AEMO submitted a rule change request for the ‘Scheduled Lite Mechanism’. to the Australian Energy Market Commission (AEMC) for its consideration.

AEMO was tasked by the Energy Security Board (ESB) to prepare the rule change in accordance with the ESB’s:

• Post 2025 Market Design Final Advice to Energy Ministers
• Consumer Energy Resources (CER) implementation plan. 

The AEMC progressed this rule change request and on 19 December 2024, following an extensive consultation process, published a final determination and a more preferable final rule titled Integrating price-responsive resources into the NEM. 

AEMO has established the Integrating Price Responsive Resources into the NEM (IPRR) project under the NEM Reform Program to carry out the procedure and system changes arising from the rule and to support industry readiness for the changes.

Scope

The IPRR rule has three major implementation components:

• A voluntary framework known as “dispatch mode” to integrate presently unscheduled* price-responsive energy resources into NEM scheduling and dispatch processes 
• A time-limited incentive scheme to drive participation in the IPRR mechanism in its early years
• A monitoring and reporting framework to  transparently evaluate the effect of price-responsive resources on the accuracy of AEMO’s short-term demand forecasts and associated impacts on market efficiency.

*The term unscheduled price-responsive resource refers to e.g. exempt storage/generation and virtual power plants (VPPs). Market Participants such as Market Customers (retailers) and Integrated Resource Providers - Small Resource Aggregators will be able to nominate and aggregate their resources together (e.g. on behalf of their customers) to participate in the mechanism on a voluntary basis.

Timeline

Industry engagement

This initiative forms part of NEM Reform Program and market participants can get involved by visiting:

• NEM Reform Forums

Procedure changes

Several AEMO’s procedures, guidelines and other documents need to be created or changed to implement the IPRR rule. For information about impacted documents, refer to the Procedure Impacts in the latest High Level Implementation Assessment. Any changes to the list of procedure updates and reporting on the progress of consultation processes, will be reported via AEMO’s Electricity Wholesale Consultative Forum or the Electricity Retail Consultative Forum as appropriate.

Open consultations for new major guidelines or procedures:

• Voluntarily Scheduled Resources Guidelines: will provide prospective voluntarily scheduled resource providers (VSRPs), as well as other energy market stakeholders including network system providers, retailers, aggregators, and owners/operators of VSRs, with the technical, market and regulatory requirements of participation in the dispatch mode. https://aemo.com.au/consultations/current-and-closed-consultations/voluntarily-scheduled-resources-guidelines-consultation

High-Level Implementation Assessment (HLIA)

AEMO has produced a High-Level Implementation Assessment as the first stage of AEMO’s IPRR reform implementation process under the NEM Reform Program. It provides an indicative and preliminary view to participants on how the IPRR rule may be implemented by AEMO. It outlines the proposed system, data exchange, process and operational changes and the indicative timeline that required to give effect to the IPRR rule. This HLIA also provides a general assessment of what these changes may mean for NEM participants. The final v1.0 version of the HLIA follows the publication of the AEMC’s final rule. AEMO welcomes any stakeholder feedback on the Final HLIA, by Thursday 27 February 2025 to NEMReform@aemo.com.au. AEMO plans to publish a v1.1 on Thursday 20 March, incorporating stakeholder feedback as appropriate. 

Further information

For more information, please contact NEMReform@aemo.com.au.