AEMC’s new energy rules: electricity trading interval cuts for lower prices
New electricity trading rules will be put to the test in 2021 with the potential to improve price and competition after an announcement from the Australian Energy Market Commission (AEMC) on Tuesday.
Generators currently sell power to the market every thirty minutes under a “30-minute interval system” but the rule change will reduce this to a quick 5 minutes, which will allow greater transparency for prices and accessibility to power during peak hours.
It will also bring on massive annual savings of nearly $100 million in energy costs and reduced retail prices for Aussies if price signals are reduced to as little as 50 cents per megawatt, per hour.
RELATED: Australia may be summer ready, but don’t get too comfortable with your energy bill
"Price signals that align with physical operations lead to more efficient bidding, operational decisions and investment," said AEMC chairman, John Pierce.
"Over time, this flows through to lower wholesale costs, which should lead to lower electricity prices than in a market with 30-minute settlement. Wholesale costs make up around one-third of a typical electricity bill.
Renewable energy will also see more inclusivity thanks to the faster generation, meaning South Australia could be well on its way to reaching its 50% renewable energy goal by 2025.
The state itself currently has the highest renewable energy capacity and capacity-per-capita of all states and territories.
"With more wind and solar generation entering the market, along with the retirement of thermal generators, there is an important role for fast response generation and services to plug the gaps when the wind isn't blowing and the sun isn't shining," Mr Pierce said.
However, while this is great news for renewable power sources, gas and coal-fueled generators may be affected as they require more than 5 minutes to respond to market changes.
With more Aussies turning to solar for their energy needs, Greens energy spokesman, Adam Bandt says, while this is a positive result, it cannot come quick enough.
"This change should be happening next year, not in 2021. COAG should overrule the AEMC and act to accelerate this reform,” he said.
And until these new rules come into effect, Mozo Director, Kirsty Lamont reminds Aussies that energy savings, solar or otherwise, can start now.
“For those who can afford the setup and installation costs, solar is a great way to trim your energy bill. But you can also make great savings by switching to a more competitive, better value plan in your state,” says Lamont.
Curious about energy options in your area? Check out our Energy Cost Cruncher Calculator.
