Market Review: Open

Overview

The COAG Energy Council asked the AEMC to undertake biennial reporting on a set of drivers that could impact on future transmission and generation investment. This review is considering options for how to make the Integrated System Plan (ISP) developed by the Australian Energy Market Operator (AEMO) an actionable strategic plan.
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The COAG Energy Council asked the AEMC to undertake biennial reporting on a set of drivers that could impact on future transmission and generation investment. This review is considering options for how to make the Integrated System Plan (ISP) developed by the Australian Energy Market Operator (AEMO) an actionable strategic plan.

Options paper

On 20 September 2018 the AEMC published an options paper as part of the Coordination of generation and transmission investment review.

Since this review commenced, AEMO published its inaugural ISP in July 2018. The ISP was developed in response to a recommendation from the Independent Review into the Future Security of the National Electricity Market: Blueprint or the Future (Finkel Review) that AEMO develop a plan to establish an optimal transmission network design, so that networks connect the areas with the best renewable energy resources at an efficient scale. The AER has also published draft application guidelines for the regulatory investment tests (RIT) for transmission and distribution networks.

In August 2018 the COAG Energy Council asked the Chair of the Energy Security Board to take the lead on a work program to “convert the ISP into an actionable strategic plan” and report back to the Council’s December 2018 meeting.

The AEMC’s options paper sets out options for how the ISP could be made “actionable” by strengthening the links between the ISP and transmission investment decisions. The spectrum of options also considers key features of the current RIT-T that are designed to protect consumers. 

Stakeholder feedback on the options will be an input into the Energy Security Board’s advice to the COAG Energy Council. 

The options paper also considers other key areas such as:

  • renewable energy zones, in particular how the transmission network could be developed to support the new renewable energy zones identified in the ISP.
  • congestion and access, if trends around increased congestion suggest that reconsideration of the existing access regime may need to be addressed in the near term once the role of the ISP has been addressed 
  • treatment of large scale storage facilities, with the Commission setting out ways that barriers to these parties connecting could be removed to promote efficient entry and competition in the wholesale market.

Next steps

The Commission will publish a final report for this review by the end of 2018.

The AEMC’s work as part of this review will be an input into the Energy Security Board’s advice to the COAG Energy Council in December 2018 on how to covert the ISP into an actionable strategic plan. The written submissions that are provided to the AEMC on the options paper will also be an input into the ESB coordinated process.

The ESB will host two stakeholder forums on the options for making the ISP an actionable strategic plan, issues relevant to the RIT-T and the status of the Group 1 and Group 2 projects identified in the ISP:

Written submissions close on 19 October 2018.

Background

In February 2016 the COAG Energy Council provided the AEMC with terms of reference for a biennial regime to report on a series of drivers that could impact on future transmission and generation investment.

On 18 July 2017 the AEMC published a final stage 1 report on the drivers of change that impact transmission frameworks.  The report recommended that the review progress to stage 2 where a number of options to improve the coordination of transmission and generation are to be considered.

This recommendation was on the basis that:

  • the drivers of transmission and generation investment have changed significantly since October 2015
  • there is likely to be large amounts of transmission and generation investment
  • this expected future investment is uncertain in its technology and location.

On 13 April 2018 the AEMC published a discussion paper as part of stage 2 of the review. The discussion paper presented the AEMC’s initial views on three key developments which may necessitate changes to the current transmission framework: congestion, the treatment of storage and renewable energy zones.

Stakeholder submissions on the discussion paper closed on 18 May 2018 and can be found below.

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