The falling costs of rooftop solar and electrification, along with the uptake of battery systems and electric vehicles, are beginning to change how power is generated and distributed.
Australia ranks first in a virtual power plant readiness index but was found to be lagging on smart meters and new regulations that would allow clusters of homes and businesses to compete with big batteries and traditional power plants.
"While we're at the top this year we could easily be overtaken by other countries," consumer energy resources specialist Gabrielle Kuiper told AAP.
"In particular Britain is doing a lot than better than us in making the most of their participation in virtual power plants," Dr Kuiper said.
The index was applied to 12 countries across five continents at varying levels of economic and electricity market maturity.
"We've had some market reforms but virtual power plants are still an emerging field and we are certainly not scoring at the top on market access and the technical side of things," Dr Kuiper said.
"The fundamental reason we score the highest is we've got the most rooftop solar per person of any country, and we do have significant flexible demand capacity controlled by distribution networks," she said.
Amber Electric, Flow Power and Reposit Power are challenging Australia's big energy firms as more consumers opt for smarter homes.
Further progress depends on establishing clear regulations, market access and fair revenue mechanisms, according to the research report.
But the biggest threat to household electricity bills was the plan for nuclear reactors around Australia, because nuclear power was inconsistent with household solar, Dr Kuiper said.
If elected, the federal opposition has pledged to build a fleet of nuclear plants on the sites of former coal-fired power stations.
"It's going to be ugly," Dr Kuiper warned.
"Effectively the only way you could make nuclear power plants work effectively would be to switch of people's solar in the middle of the day and there are technical and commercial issues around that," she said.
Rural Queensland, for example, has 60 per cent of households with rooftop solar, which she said was important for self-reliance, resilience and the changing climate but fundamentally incompatible with building big, centralised infrastructure.
While most countries in the study had plans for widespread smart meters, low rates of penetration outside the United Kingdom and France was found to be limiting the spread of virtual power plants.
"We haven't made the most of looking at those data flows and consumer access to real-time data," Dr Kuiper said.
"We're very behind on thinking about the data flows and the best way to get the data flows in the interests of consumers as opposed to the interests of large energy retailers," she said.
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