The Australian Energy Market Commission has released a directions paper setting out its initial views and high-level policy pathways to build a stronger electricity market by reforming the arrangements for controlling power system frequency.

This directions paper dovetails with the Energy Security Board's (ESB) post 2025 market design project and direction. It is part of the essential system services market design initiative.

The paper covers two rule change requests that relate to the arrangements for controlling power system frequency.

“The control of power system frequency is crucial to having a secure power system – one that operates within set technical parameters, even when there are unexpected equipment failures,” said AEMC Acting Chair Merryn York. 

“A lot of work has been done collaboratively across all market bodies in recent years to improve frequency outcomes. This latest paper builds on that and dovetails with the ESB post 2025 market design work to design the frequency arrangements for the future power system. At the front of our minds as we examine pathways forward is the need for arrangements that encourage efficient investment and operation for the long-term consumer interest.”

Frequency varies whenever electricity supply does not exactly match consumer demand and uncontrolled changes in frequency can cause blackouts. To avoid unplanned system outages, power system frequency must be controlled within a pre-defined range around 50 hertz (Hz).

The rule change requests discussed in the directions paper relate to the arrangements for two different forms of frequency response  ̶  fast frequency response and primary frequency response. 

Fast frequency market ancillary services

As the generation mix changes, challenges for power system operation are emerging. One of these is a projected decrease in power system inertia. Inertia is provided inherently by large spinning machinery associated with synchronous generators such as coal, hydro and gas-fired power stations and resists changes in frequency due to sudden changes in supply and demand. Reduced inertia can lead to faster and larger frequency deviations in the wake of events such as the disconnection of a generator or transmission line. 

Infigen Energy has proposed rule changes to facilitate the provision of faster frequency response services to help manage the risks associated with reduced inertia. Fast frequency response is a rapid change to generation or load to stabilise frequency in the system. Different technologies such as batteries, flywheels and wind turbines can provide the response. 

The directions paper details two high-level options for fast frequency response arrangements and calls for feedback on related matters including pricing arrangements and cost recovery. 

Primary frequency response incentive arrangements

Today’s directions paper also outlines different options to improve incentives for primary frequency control during normal operation. 

The Australian Energy Market Operator asked for the rule change, identifying a degradation of frequency performance under normal operating conditions.

In March 2020, the AEMC introduced a mandatory obligation for generators to respond automatically to changes in frequency based on performance parameters defined by AEMO. The mandatory arrangements sunset on 4 June 2023.  On their own they are not a complete solution as they do not adequately value or provide incentives for provision of primary frequency response. 

The directions paper sets out potential changes to the mandatory arrangements and the potential for additional mechanisms as an enduring solution.

Submissions on the directions paper are due by 4 February 2021.

Media: Kellie Bisset, Media and Content Manager, 0438 490 041