The AEMC wants users to sell power back to the grid to guarantee energy demand.

The Federal Government’s chief energy advisor says large commercial and industrial users should be able to easily reduce their demand in peak periods and sell it back into the grid, known as ‘demand reduction’.

The suggestion is seen a sign of the rising pressure on power generation, especially with the looming closure of the Liddell coal-fired power station in the NSW Hunter Valley.

Australian Energy Market Commission (AEMC) chair John Pierce says energy demand must be guaranteed in the increasingly uncertain environment.

“These are times in which those consumers have agreed not to consume electricity or consume less or later,” Mr Pierce said.

“Taking demand pressure off the power system is a substitute for generation and helps tackle rising wholesale prices at peak times, reducing electricity costs for everyone.

“It makes sense to manage demand for electricity if we are going to deliver reliable energy at the least possible cost.

“We want to make it more attractive and eventually open it up to be a truly two-sided market where generators and consumers face the same price signals and incentives to either supply or use electricity.”

The Australian Competition and Consumer Commission (ACCC) says the proposal would make it more attractive for big energy users to reduce their demand.

ACCC chairman Rod Sims said it would be a vital development.

The Australian Energy Council, a lobby for dozens of major electricity and downstream natural gas businesses, said it could be a good idea.

“There is no doubt that this rule change and its new settlement arrangements, while an improvement on what was proposed by some parties, will still add complexity to what is an already complex wholesale market settlement arrangement,” it said.

Households and small customers would be excluded under the AEMC’s model, because of consumer protection concerns.

However, the AEMC said letting small consumers access the market could be considered after a 12 month review.

Energy Minister Angus Taylor said it would give power back to consumers.

“Consumers that work together will have improved negotiating power and will get a better deal. That's an important change,” Mr Taylor said.

Energy consumer advocates at the Public Interest Advocacy Centre say consumers should not be left out.