Market Review: Open

Overview

Under the National Electricity Rules, the Australian Energy Market Operator (AEMO) must keep the power system stable and securely operating at a frequency close to 50 hertz. The specific frequency requirements that AEMO must meet under different power system conditions are set out in the frequency operating standard, which is determined by the Reliability Panel. This review is investigating the appropriateness of the settings in the standard, in light of the ongoing energy market transformation as conventional synchronous generation leaves the market and non-synchronous generation such as wind and solar panels enters the market.  
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Under the National Electricity Rules, the Australian Energy Market Operator (AEMO) must keep the power system stable and securely operating at a frequency close to 50 hertz. The specific frequency requirements that AEMO must meet under different power system conditions are set out in the frequency operating standard, which is determined by the Reliability Panel. This review is investigating the appropriateness of the settings in the standard, in light of the ongoing energy market transformation as conventional synchronous generation leaves the market and non-synchronous generation such as wind and solar panels enters the market.  

The Panel’s review of the frequency operating standard (FOS) has been split into two stages. The Panel is now undertaking stage two of the review. This follows the publication of a final report for the AEMC’s Frequency control frameworks review in July 2018 which considered the appropriateness of the current frequency control frameworks in the NEM. Stage two of the FOS review includes a broader consideration of the settings of the FOS, along with potential improvements to the structure and consistency of the FOS document. 

Stage one

Stage one was completed in November 2017. This first stage addressed primarily technical issues and market framework changes stemming from the new Emergency frequency control scheme Rule, including the new category of protected contingency event in the FOS. At the conclusion of stage one, the Panel made a new version of the FOS, effective 14 November 2017.The changes made in this new version of the FOS included: 

  • implementation of changes already made to the NER, through the Emergency frequency control schemes rule.
  • clarification and further guidance as to how AEMO operates the power system, particularly as this relates to managing different kinds of contingency events.

Stage two

Stage two commenced on 26 July 2018. This stage involves an assessment of each of the elements of the FOS, including the boundaries of the various frequency bands and the timeframes for restoration of power system frequency following a specific event. 

During stage two, the Panel will also consider whether it is appropriate to retain the current limit in the FOS on accumulated time error and consider potential improvements to the structure and consistency of the FOS document.

Key Dates for the review

Milestone Date
Stage one Draft Determination  12 September 2017
Close of submissions – stage one Draft Determination 10 October 2017
Stage one Final Determination 14 November 2017
Stage two Draft Determination November 2018
Stage two Final Determination March 2019

The AEMC’s system security and reliability work program

The review of the FOS is one part of an integrated approach to addressing current challenges relating to maintaining system security as the NEM undergoes technological transformation.  
 
In July 2018 the AEMC published a final report for the Frequency control frameworks review. Through this review, the Commission investigated the market and regulatory arrangements that support effective control of system frequency in the NEM. Elements of this review that are particularly relevant to the Review of the FOS include:

  • investigation of frequency control during normal operation 
  • potential changes to the arrangements in the NER that relate to the markets for frequency control ancillary services (FCAS). 
  • monitoring and reporting of power system frequency performance

The Frequency control frameworks review identified a number of issues which need to be addressed together with a longer term collaborative work plan. The next steps for the work program for the AEMC include:

  • consulting on potential longer-term mechanisms for the procurement of a primary regulating response and other frequency services as the needs of the power system evolve
  • consulting with stakeholders on how the frequency requirements in relation to the maintenance of a satisfactory operating state are specified in the NER and the frequency operating standard.

Background

On 26 July 2018 the AEMC provided a revised Terms of Reference to the Panel to cover stage two of the review of the FOS. The revised terms of reference extend the completion date for the review from 31 July 2018 to 31 March 2019 to account for the assessment of issues associated with stage two.  

The frequency requirements that AEMO must meet are set out in the FOS, which is defined in the NER and determined by the Reliability Panel. One of the Australian Energy Market Operator’s (AEMO) key obligations under the National Electricity Rules (NER) is to maintain the power system in a secure operating state. This includes keeping system frequency within the normal operating frequency band that is set out in the FOS.
 
The FOS includes defined frequency bands and timeframes in which the system frequency must be restored to these bands following different events, such as the failure of a transmission line or separation of a region from the rest of the NEM. These requirements then inform how AEMO operates the power system, including through applying constraints to the dispatch of generation or procuring ancillary services.
 
The FOS currently consists of two separate standards: one for the mainland NEM, and one for Tasmania. This reflects the different physical and market characteristics of the Tasmanian region as opposed to the mainland NEM. 
 
Prior to the commencement of this review, the FOS for Tasmania was last reviewed and determined by the Panel on 18 December 2008 and the FOS for the mainland was last reviewed and determined by the Panel on 16 April 2009. 

On 11 July 2017 the Panel published an issues paper seeking stakeholder comment on issues relating to the FOS that applies to power system frequency in the national electricity market (NEM). 
 
On 14 July 2017 the Panel published an updated version of the Issues paper. This was necessary to correct an error identified in the original issues paper, which referred to an earlier version of the Tasmanian frequency operating standard. The correct values for the Tasmanian frequency operating standard have now been included in section 2.2.2 and Appendix C of the revised issues paper.

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