Project Edge has been called "an absolute role model" for the nation by community groups excited to be involved.

About 50 residential customers will begin the three-year scheme early in 2021 before it's expanded to up to 1000 residential, commercial and industrial customers in the North East.

The Australian Renewable Energy Agency on Wednesday announced $12.9 million in funding towards software for the project, which is a partnership between Australian Energy Market Operator, network AusNet Services and retailer Mondo Power.

ARENA chief executive Darren Miller said resources like rooftop solar, home batteries, home energy management systems, electric vehicles and smart appliances would transform the electricity system.

"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," he said.

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Totally Renewable Beechworth president Sue Gold said the opportunity to build the resilience, security and transparency of energy systems was "beyond brilliant".

"We're really interested in a model where the power that's generated and stored and distributed is within community and within regions," she said.

"We want to know where it comes from, we want to know where it goes to, we want to know what it costs."

Ms Gold said the project offered two-way benefits.

"We see that as an absolute role model for what can happen nationally," she said.

Totally Renewable Yackandandah vice-president Matthew Charles-Jones said the marketplace would allow small users and generators of electricity to replace coal-fired generation.

"For some communities wishing to transfer to renewable energies, this is the piece of work that's needed to change from individual installs to a cohesive supply of electricity," he said.

Starting Project Edge in the North East reflected the region's existing commitment to community energy.

"It's a real endorsement of the work we've done in Yackandandah to encourage people to both reduce their usage, add solar generation and where they can afford to do it, adding batteries as well," Mr Charles-Jones said.

Minister for Energy and Emissions Reduction Angus Taylor said it was important to find the best way of ensuring the grid and electricity supplies remained reliable.

"This microgrid project gives control back to everyday Australians." he said.

Indi MP Helen Haines said the $13 million investment was a huge step forward for the region.

"With this new marketplace, everyday households and small businesses fitted with solar and batteries can start being paid for providing those services," she said.