It will initially involve 50 houses in the Hume region but will scale up to around 1000 residential,commercial and industrial electricity customers,helping to reduce electricity costs and managing challenges associated with a decentralised grid.
Australian Renewable Energy Agency chief executive Darren Miller said the trial would provide the road map for integrating into the grid.
He said as the take-up of non-traditional energy resources was expected to grow,it was clear these technologies were going to transform the nation's electricity system.
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"While these devices and technologies can make our grid more reliable,affordable and lower emission,rapid uptake is already impacting how the grid is managed and highlighting the limitations of our existing market frameworks,"Mr Miller said.
He said the trial would help develop trading mechanisms to maximise the economic benefits to customers and the system and minimise the costs of supply to all energy customers.
ARENA will provide $12.9 million in funding to the Australian Energy Market Operator,which will partner with network AusNet Services and retailer Mondo Power to co-ordinate the development of a replicable model for trading of electricity and grid services that can be expanded across the national electricity market (NEM).