Australia’s National Electricity Market (NEM) is undergoing a structural shift from centralised generation toward a decentralised and bidirectional system. This evolution, driven by the rapid growth of Distributed Energy Resources (DERs) such as rooftop PV, batteries, electric vehicles and flexible demand, is challenging traditional grid management. While the system urgently requires a coordinated national vision, states are developing divergent pathways forward. To transition from fragmented, passive DER integration to orchestrated, high-value participation, the sector must unite around shared principles: granular network visibility, dynamic control capabilities, system-wide interoperability, and customer-aligned incentives.
Technical leadership from Western Australia, operational innovation from Queensland, and pricing mechanisms in Victoria demonstrate that the building blocks are in place. The challenge now lies in national coordination and regulatory acceleration to turn millions of DERs from system disruptors into the backbone of Australia’s clean, reliable, flexible grid.
WA: DERs as dispatchable controllable assets
The core challenge is not DER penetration, but orchestration — transforming DER fleets into secure, dispatchable resources that actively support grid operations. This requires replacing uncontrolled export regimes with dynamic participation in system services markets via Virtual Power Plants (VPPs) and active DER management.
Jai Thomas, Deputy Director General and Coordinator of Energy at Energy Policy WA, says Western Australia’s Distributed Energy Resources Roadmap “lays out the pathway to securely integrate DER devices, such as rooftop solar and batteries, into WA’s electricity networks and market.”
[Source - Energy Networks]
A key enabler is the VPP framework, a system that simulates traditional generation by combining thousands of DER assets into dispatchable blocks capable of participating in both energy and ancillary services markets.
“VPPs aggregate disparate and diverse DER into a unified, controllable entity… enabling dynamic demand-side management, and balancing the supply and demand of energy,” Thomas explains.
The Australian Energy Market Operator’s (AEMO) VPP demonstrations tested the ability of aggregated home solar and battery fleets to participate in the NEM. In South Australia, a large-scale VPP allows households to trade directly on the NEM.
In WA, a suite of initiatives are already operational. Emergency Solar Management (ESM) in the South-West Interconnected System curtails generation during low-demand periods by remotely switching off inverters under 5kW to preserve system stability.
[Source - WA Gov]
Meanwhile, Horizon Power's Smart Connect Solar enables high penetration of DER in regional WA by combining internet-connected solar with the Distributed Energy Resource Management System (DERMS) to forecast energy supply and demand. Ray Achemedei, Executive General Manager, Technology and Digital Transformation at Horizon Power says the program supports the State Government’s net zero 2050 goal and targets “zero refusals for connecting rooftop solar” by 2025.
WA’s newly announced $108 million Project Jupiter will be the first live DER marketplace integrated with the wholesale market, built on the learnings of the $25 million Project Symphony and powered by new legislative powers under the DER Act 2024.
WA’s upcoming battery rebate scheme is similarly designed to enhance flexibility, resilience, and market integration: “When integrated into a VPP, household batteries will be capable of responding to frequency fluctuations, balancing supply and demand, and providing backup power during outages,” says Thomas.
Queensland: Flexibility through the DSO lens
Queensland’s approach centres on enabling Consumer Energy Resources (CERs) through a Distribution System Operator (DSO) model. Glenn Springall, General Manager for Renewables and Distributed Energy at Energy Queensland, says CER flexibility is essential for optimising network capacity and minimising costly augmentations.
“These are critical core technical capabilities that exist to ensure overarching system security and therefore are essential that plant and proponents are meeting those requirements,” Springall says.
[Source - Race for 2030]
“There are a range of mature connection standards and connection requirements for consumer energy resources in Australia,” Springall explains, but by “being flexible with the operation of CER we can better use and benefit from the capacity of the existing network and lessen the need to augment for peak periods.”
Using local energy at the time it is generated improves efficiency. “At Energex and Ergon Energy, we are continuing to work on improving network visibility and capabilities to enable this flexibility.”
Springall highlights the dual-functionality of CER: “From the perspective of the distribution network, it is absolutely critical that CER has the flexibility to provide market services, such as FCAS, while providing networks with optimal real-time operation when needed.”
To operationalise flexibility, Energy Queensland is investing in Advanced Distribution Management Systems (ADMS), smart meters, and nodal-level dynamic network models. These tools enable granular visibility and real-time decision-making at the local level.
[Source - ETAP]
This model reflects global trends where Distribution Network Service Providers (DNSPs) assume active roles in DER coordination, network constraint management, and integration with AEMO via distributed control and forecast systems.
It is “critical” that this is “supported by suitable policy settings, regulatory environment and appropriate customer incentives,” Springall notes.
Victoria: Network intelligence and tariff reform
Victoria’s trajectory is heavily informed by high smart meter penetration, which provides data granularity to support DER integration. According to Andrew Linnie, Executive General Manager of Distribution at AusNet, the focus now is on deploying control systems and pricing mechanisms to match this visibility.
“The integration of DER into networks and maintaining system stability and quality of supply requires us to look at this area differently to what we have traditionally,” Linnie says. The need for accuracy and detail is ever more important.
Linnie argues that support this shift, the following changes are needed:
The innovation unfolding across Western Australia, Queensland, and Victoria offers valuable models for DER integration. But without a nationally coordinated approach, the risk is a patchwork of systems that cannot scale or interoperate effectively. Divergent policies and technical standards may lock in inefficiencies, hinder market participation, and compromise system reliability. To fully realise the potential of DERs as a cornerstone of Australia’s clean energy future, governments, regulators, and industry must converge on a unified national framework; one that enables flexibility while ensuring consistency. The window to shape this architecture is closing fast, and only a coordinated effort will ensure millions of DERs function as one system, not many.