Grid Events Explained: What Happens When Energy Demand Spikes

Published: November 3, 2026

Author: Kenneth Balantucas

When spare generating capacity runs thin on a hot evening, the grid leans on flexible demand, and some households get paid to provide it.

An energy demand event, often called a grid event, is a period when electricity demand in the National Electricity Market (NEM) gets close to available supply, usually on hot summer evenings. The Australian Energy Market Operator (AEMO) warns the market with lack of reserve (LOR) notices, then calls on demand response and emergency reserves. As at October 2026, CovaU pays bill credits to eligible customers who help ease these peaks.

Key highlights

AEMO uses three levels of lack of reserve notice, LOR1 to LOR3, and LOR3 means load shedding is occurring or forecast because reserves have run out (AEMC Reliability Panel, June 2025.pdf)).
The NEM reliability standard targets no more than 0.002% of each region’s yearly energy demand going unserved (AEMC Reliability Panel, June 2025.pdf)).
The Bureau of Meteorology says November to January maximum temperatures are very likely (greater than 80% chance) to be above average across much of Australia (outlook issued 22 October 2026).
Since 24 October 2021, the wholesale demand response mechanism has allowed demand response to be bid into the wholesale market as a substitute for generation (AEMC).
CovaU’s Powerbreak pays 15c/kWh in bill credits per grid event, as at October 2026.

What counts as a grid event?

Electricity supply and demand have to match every second. Most of the year there is a comfortable buffer of spare capacity. The buffer shrinks when demand is high and supply is constrained at the same moment: a run of hot days when air conditioners are working hard, rooftop solar fading after sunset, a large generator offline for repairs, or a transmission line out of service.

The Bureau of Meteorology’s outlook issued 22 October 2026 adds to that pressure this summer. It says a strong El Niño is underway and gives an increased chance (over 50%) of unusually high maximum temperatures across much of Australia from November to January (Bureau of Meteorology). Hot evenings are when the grid is most stretched, which is also why retailers price that window higher. Our guide to peak and off-peak electricity rates covers how time-of-use pricing works, and demand tariffs explain why your highest half hour can matter.

How AEMO’s lack of reserve notices work

AEMO declares lack of reserve conditions when it sees a non-remote chance of load shedding over the next seven days. The notices exist to prompt the market to respond, for example by bringing more generation online, before AEMO has to intervene (AEMC Reliability Panel, June 2025.pdf)).

Notice	What it means	What usually happens next
LOR1	Losing the two largest credible supply sources one after another would cause load shedding	A market alert: generators and large users see the signal and respond
LOR2	Losing the single largest credible supply source would cause load shedding	AEMO may activate emergency reserves or direct generators
LOR3	Load shedding is happening, or forecast, because reserves have run out	Controlled, usually rotational, load shedding as a last resort

Notices can be forecast or actual. A forecast LOR2 headline is not a blackout warning for your street. It is a signal days or hours ahead that gives the market time to close the gap. The system is planned around very small amounts of unserved energy: the reliability standard allows 0.002%, and an interim reliability measure tightens that target to 0.0006% (AEMC Reliability Panel, June 2025.pdf)).

Where demand response fits in

When the market does not close a gap on its own, AEMO can use the Reliability and Emergency Reserve Trader (RERT). RERT lets AEMO contract extra reserves, including generation or demand response that is not otherwise in the market, as a safety net against load shedding. AEMO can procure it with long notice (at least ten weeks), medium notice (one to ten weeks) or short notice (three hours to seven days) (AEMC Reliability Panel, June 2025.pdf)).

Demand response is now part of the everyday market too. Under the wholesale demand response mechanism, which commenced in October 2021, a registered demand response service provider can bid reductions in demand into the wholesale market as if they were generation (AEMC). For households, the practical route is aggregation: a retailer or virtual power plant (VPP) operator pools thousands of batteries or controllable loads and acts on them together when a grid event is called.

How households can get paid for easing peaks

You do not need to run a power station to help. A home battery that discharges into the evening peak, or a hot water system that pauses for an hour, takes load off the grid at the moment it matters most. As at October 2026, CovaU offers two ways to be rewarded for that.

Option	Who it suits	How it works	What you earn
VPP Plan (NSW, VIC)	Owners of a compatible home battery	CovaU can dispatch your battery during events while keeping at least 20% in reserve, with no lock-in	A bill credit for each dispatch event
Powerbreak	Customers with controlled load	Fully automatic, nothing to switch on or off yourself	15c/kWh in bill credits per grid event

Even without either option, you can help yourself and the grid on event days. Run the dishwasher, washing machine and pool pump in the middle of the day rather than from 4pm to 9pm, and cool the house before the evening peak instead of during it. If you are in NSW, QLD or SA, the Solar Sharer Offer gives three free hours of usage each day (11am to 2pm in NSW and QLD, 12pm to 3pm in SA), and Victoria’s Midday Power Saver gives free usage from 11am to 2pm, both up to 24 kWh a day.

How CovaU can help

If you own a battery, start by checking it against CovaU’s compatible battery list, which covers 11 brands and about 390 models, then compare the VPP Plan and Powerbreak on our solar and battery page. Customers without a battery can still shift flexible loads into cheaper or free hours on our residential plans.

CovaU’s support line is open 24/7 on 1300 689 866 if you want to talk through which option suits your home, and CovaU is rated 4.6 out of 5 on ProductReview.com.au from 2,644 reviews as of October 2026.

Frequently asked questions

Does an LOR notice mean my power will go out?

Not necessarily. LOR notices are warnings designed to prompt generators and large users to respond before AEMO has to intervene. Rotational load shedding for supply shortfall only happens at LOR3.

What is a grid event on an energy plan?

It is a period, usually on a hot evening, when your retailer or VPP operator asks enrolled batteries or controlled loads to reduce grid demand. On CovaU’s Powerbreak, each grid event earns 15c/kWh in bill credits, as at October 2026.

Do I need a home battery to get paid for demand response?

Not always. CovaU’s VPP Plan needs a compatible battery, but Powerbreak is designed for customers with controlled load and runs automatically.

Will a VPP leave my battery empty during a blackout?

CovaU’s VPP Plan keeps a minimum 20% battery reserve during dispatch events, as at October 2026. How much backup you get in an outage also depends on whether your battery system is set up for backup power.

Sources

About CovaU Energy

CovaU Energy is a 100% Australian-owned company providing electricity and gas to homes and businesses across Australia. We offer competitive energy plans, top-rated 24/7 customer service, and no lock-in contracts. We also have incredible rewards for our new and existing customers. For more information about our electricity and gas plans, call 1300 111 688 to talk to our energy specialists or request a quote for the rates in your area. You may also compare plans and sign up here directly.