Market Review: Completed
This review looked at ways to deliver a reliable power system – one that has enough electricity available when consumers need it – at the lowest cost. It included consideration of several recommendations from the Finkel Panel’s Independent Review into the Future Security of the National Electricity Market that relate to reliability.
On 26 July 2018 the AEMC published the final report of its Reliability Frameworks Review.
This report makes a series of recommendations to implement and develop mechanisms in the NEM aimed at supporting reliable outcomes for consumers at lowest cost. The key recommendation areas are:
- Improving the information available to the market so decisions made by market participants, the operator, regulators and policy makers are better-informed.
- Integrating demand into the wholesale market to support an active demand side.
- Improving wholesale market outcomes and signals to underpin efficient operational decisions
This report also concludes a number of Finkel Panel recommendations concerning reliability that were directed to the AEMC. Specifically:
- The Commission has recommended a package of changes to facilitate demand response in the wholesale market
- The need for a strategic reserve is being considered through the Enhancement to the Reliability and Emergency Reserve Trader rule change process.
- The Commission has concluded that a US-style day-ahead market would not be suitable for improving reliability outcomes in the NEM.
The final report also identifies some areas for further work, including:
- Considering, in parallel with the enhanced RERT rule change, whether the directions and instructions need to be updated as part of the suite of intervention mechanisms available in the NEM
- Working with AEMO to identify any future ramping needs in the NEM
- Continuing to work with AEMO to consider further the issues that AEMO has been observing in South Australia, such as the need for AEMO to intervene regularly for system security reasons.
Over the past couple of years, a series of events, such as the load shedding in South Australia and NSW in February 2017, as well as numerous policy debates and announcements (for example, the Energy Security Board’s national energy guarantee) have led to a greater focus on reliability in the national electricity market (NEM).
At the same time, Australia’s energy system is undergoing a transformation - driven by changing consumer choices and rapidly evolving technology, both on the demand and the supply side.
The AEMC considered that it was timely to assess whether the current market and regulatory reliability frameworks are appropriate and has self-initiated this review under Section 45 of the National Electricity Law.
The Commission published its terms of reference on 11 July 2017, published an issues paper on 22 August 2017, an interim report on 19 December 2017 and a directions paper on 17 April 2018. We received 18 submissions to the issues paper, 31 to the interim report and 34 to the directions paper. These can be found below.
The Review was also guided by a Reference Group which provided high-level input into the review and a Technical Working Group which provided technical advice.