The Australian Energy Market Commission (AEMC) has announced reforms enabling virtual power plants (VPPs) and other consumer energy resources to compete directly with large-scale generators in the wholesale electricity market – leading to impacts on the energy storage industry.
This shift aims to reduce emissions, lower energy prices, and deliver $834m in cost savings by 2050 through improved market efficiency.
The reforms introduce a “dispatch mode” allowing resources like household batteries, backup generators, and industrial demand response to participate in the market.
Currently, the lack of insight into how these resources respond to price fluctuations challenges the Australian Energy Market Operator (AEMO) and increases costs. As batteries and electric vehicles proliferate, this issue is becoming more significant.
To encourage early participation and address initial barriers, a $50m incentive scheme will launch in April 2026, ahead of the framework’s implementation in May 2027.
“While there are costs to encourage early participation, the long-term benefits for consumers far outweigh these initial investments. It’s a win-win that doesn’t require changing behaviour, just smarter market operation,” says Collyer.
The AEMC emphasises the reforms’ potential to optimise energy use, reduce system costs, and create opportunities for energy suppliers and users, marking a significant evolution in Australia’s energy market.
