Markets and Framework

The successful integration of Distributed Energy Resources (DER) requires a framework that allows for these to be integrated into the market. AEMO’s markets and frameworks workstream aims to work with industry to define and develop these markets, and includes the Open Energy Networks project recently concluded with Energy Networks Australia (ENA), and more recently, working with the Energy Security Board (ESB) on the post 2025 market design process.   


Australia's electricity grid was originally designed to handle one-way distribution of power from large-scale generators to customers. In recent times, there has been an increasing adoption of DER, particularly solar PV and batteries, that are 'plugged' into the electricity grid resulting in electricity flowing back into the grid. Some parts of the Australian energy network are already experiencing periods where two-way electricity flows occur within and between the distribution network and the transmission system. 

This bi-directional electricity flow creates challenges for energy networks, whilst also providing opportunity to Australian energy consumers to generate and contribute electricity to the energy network via their DER investment, participate in the energy market, and access new and value-adding energy services, rewards and incentives.  

Increasing penetration of DER can also adversely affect distribution network system providers (DNSPs) and AEMO’s ability to sustain a secure and reliable energy supply. 

The DER Program Markets and Frameworks workstream was established to address the wholistic market and technical integration of DER into the energy system. 

Post 2025 Market Design 

Currently AEMO’s markets and frameworks workstream is involved in supporting the Energy Security Board (ESB)’s Post-2025 Market Design process.  There are a two main streams of work in this process; DER integration, and the Two-Sided Market that will likely define the future market arrangements including participation arrangements and a framework for the co-ordination and optimisation of DER.   

In addition, the DER program markets and frameworks workstream is working to ensure DER is incorporated into the future market design.  More information of the ESB Post 2025 process can be found here

Open Energy Networks project 

One of the key pieces of work that has helped frame several key activities in DER integration including the WA DER Roadmap, the ESB post 2025 DER Integration stream as well as AEMO’s DER pilots and demonstrations was the Open Energy Networks project.

AEMO and Energy Networks Australia conducted a joint consultation in 2018 to identify how best to transition to a two-way electricity grid and associated marketplace that effectively integrates and actively manages DER within Australia’s energy system.

The Open Energy Networks project explored various frameworks for the co-ordination and optimisation of DER.  These were the;

  • Single Integrated Platform
  • Two-Step Tiered
  • Independent DSO
  • Hybrid Model (DSO/DMO)

While each was considered viable – a Hybrid Model was identified as the model for further trialling and exploration as it balances the need of the customer, network and system without adding excessive cost.

In addition, a cost-benefit analysis comparing each model was commissioned by Energy Networks Australia and AEMO. Baringa Consulting undertook this cost-benefit analysis of the concepts and models identified.   They found that each model could deliver the identified benefits and that the cost for each model were such that a positive net benefit could be achieved in networks and systems that had a high penetration of DER (High-DER).  The conclusion was that frameworks should be adopted in High-DER networks first.

The Required Capabilities and Recommended Actions report provides stakeholders with a summary of key outcomes from the detailed research and engagement phases of the project and outlines the required capabilities and recommended actions to effectively integrate high levels of DER into the future energy grid.  

The highest priority being the need to define and expand the role of a DER Aggregator and the need for DNSPs to invest in network monitoring and constraint communication.

For more information on AEMO’s DER Program markets and frameworks workstream, or to get involved, contact

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