Market Review: Open

Overview

The Panel’s review of the frequency operating standard (FOS) is being undertaken in two stages to accommodate interactions with related work programs, 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.
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The Panel’s review of the frequency operating standard (FOS) has been undertaken in two stages to accommodate interactions with related work programs. 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. 

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.  

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 National Electricity Rules, 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. The Panel’s intent for stage two of the FOS review is to assess and resolve remaining issues identified in stage one of the review, except for the following issues that relate to how the National Electricity Rules set out the components of the FOS: 

  • reviewing the requirements in the FOS for frequency performance during normal operation 
  • consideration of the inclusion in the FOS of a standard for the rate of change of frequency in the power system 

These issues are being considered by the AEMC as part of the frequency control work plan that has followed our Frequency control frameworks review.

Draft determination

On 6 December 2018, the Panel published a draft determination and a draft FOS which address a number of issues that were identified through stage one of this review. The draft FOS includes changes in relation to:

  • the limit on the size of the largest generation event in the Tasmanian power system
  • improvements to the structure and consistency of the FOS.

This draft determination also includes a summary of the Panel’s considerations on: 

  • the settings in the FOS that relate to contingency events
  • the limit in the FOS on accumulated time error. 

On the advice of AEMO, the Panel has maintained the existing settings in the FOS in relation to these issues, noting that the immediate priority is the joint AEMC-AEMO frequency control work plan published as part of the final report for the Frequency control frameworks review.
 

Key Dates for the review

Milestone Date
Stage one Draft Determination  12 September 2017
Stage one Final Determination 14 November 2017
Stage two Draft Determination 6 December 2018
Close of submissions - Stage two Draft Determination 17 January 2019
Stage two Final Determination March 2019

 

The AEMC’s system security 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. Learn more about the frequency control work plan

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.
 
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. 

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Documentation

STAGE TWO DRAFT DETERMINATION

Reliability Panel Documents

AEMO Documents