The Australian Energy Market Commission released its final report on 23 October 2025, recommending that the Wholesale Demand Response Mechanism continues operating in the National Electricity Market. For large energy users across Australia, this means an established pathway for getting paid to reduce consumption during peak demand periods remains open.
The decision matters because the mechanism has delivered measurable benefits since commencing in October 2021. The AEMC’s analysis shows the mechanism has generated approximately $4.7 million in wholesale market benefits against annual operational costs of $350,000 to $500,000.
When demand response is deployed, it reduces wholesale electricity prices by around $30 per megawatt-hour during those periods. The total impact on price suppression reaches into hundreds of millions when you account for all the electricity traded during deployment events.
The WDRM allows businesses to participate in demand response through registered providers who bid their load reductions into the wholesale market. When the grid is under stress, factories and large facilities can temporarily switch off equipment and receive payment for that reduction.
It fills a specific gap. AEMC Chair Anna Collyer noted that the WDRM is currently the only market mechanism in the NEM wholesale market that facilitates payment for reducing load against a baseline.
It’s also the only mechanism allowing non-financially responsible market participants to access the wholesale market. This means businesses don’t need to become financially responsible for their electricity supply to participate in demand response, which removes a significant barrier.
Participation has grown slowly since the mechanism launched. Two demand response service providers have registered capacity, with Enel X operating around 140 MW and Viotas contributing approximately 6 MW.
That’s well below the potential. Enel X has indicated it believes around 1 gigawatt of demand response capacity could participate under the right conditions across the National Electricity Market.
The modest uptake reflects several factors. Some stakeholders have argued the mechanism’s design settings are overly cautious, limiting eligibility and making participation more complex than necessary.
The Commission’s final report made two key recommendations. First, the WDRM should continue operating alongside other demand-side participation reforms.
Second, the AEMC will initiate a rule change to expand eligibility to sites with multiple connection points. Currently, facilities with multiple meters at the same location can’t participate, which excludes data centres, large campus-style operations, and some industrial facilities.
The AEMC anticipates initiating this rule change in the first half of 2026. If implemented, it would likely increase the pool of eligible participants and the volume of demand response available to the market.
The AEMC’s broader work on integrating price-responsive resources into the NEM through the IPRR and CER benefits rules will complement the WDRM rather than replace it. Both pathways for demand-side participation will coexist.
The IPRR reforms introduce a dispatch mode scheduled to commence in 2027. These reforms focus on consumer energy resources like batteries, electric vehicle chargers, and programmable devices.
The WDRM serves a different function. It provides a pathway for large commercial and industrial loads that don’t fit neatly into consumer energy resource frameworks but have significant flexibility to reduce consumption during high-price events.
If your operation has significant energy loads that can be temporarily reduced without disrupting core business functions, the WDRM provides a formal pathway to monetise that flexibility. Manufacturing facilities, cold storage operations, and data centres are commonly suited to this type of participation.
Participation requires working with a registered demand response service provider. They handle the technical requirements, baseline establishment, and bidding into the market on your behalf.
Our energy specialists assess whether demand response participation makes sense for your operation. We evaluate your load profile, operational constraints, and the economics of participation to determine if it’s worth pursuing.
Baseline methodologies present one of the more complex aspects. The mechanism needs to establish what your consumption would have been without the reduction to calculate the payment.
This requires predictable load patterns. Operations with highly variable consumption may struggle to meet the baseline requirements, though work is ongoing to expand the available baseline methodologies.
The AEMC noted in its review that existing WDRM participants would be unlikely to shift to alternative mechanisms if the WDRM were phased out. This suggests the mechanism serves a specific need that other pathways don’t fully address.
Demand response is one component of a broader energy management approach. For most businesses, the priority remains securing competitive supply contracts and managing consumption patterns to avoid peak period charges.
The WDRM adds another option for businesses with the right load characteristics and operational flexibility. It works alongside other energy cost reduction strategies rather than replacing them.
Our team analyses your business’s specific situation. We evaluate contract structures, tariff options, and opportunities like demand response to build an energy procurement strategy that actually works for your operation.
The AEMC’s decision to continue the mechanism provides more certainty about its future. For businesses considering participation, this regulatory clarity matters when evaluating the time and cost investment required to set up and maintain participation.
If you’re considering demand response participation, start with an assessment of your load flexibility. Not every business has operations suited to scheduled load reductions, and participation involves costs as well as potential revenue.
We work with commercial and industrial clients to evaluate whether demand response makes economic sense. This includes analysing your consumption patterns, operational constraints, and comparing potential WDRM revenue against simpler strategies like time-of-use optimisation.
The mechanism remains available for businesses with suitable load profiles. Whether it’s the right fit depends on your specific circumstances, which is where specialist energy advice adds value.
Our energy specialists assess whether WDRM participation suits your operation and help you evaluate all available strategies for reducing energy costs.
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This article provides general guidance based on available energy market data. Energy market conditions and tariff structures vary by location and are subject to change. For specific energy procurement advice tailored to your business, contact our team.
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