The Australian Energy Market Commission today released a draft plan to make it simpler, faster and more predictable for new large energy resources like hydrogen, wind, solar and batteries to connect to the energy grid and operate stably. 

The rapid transition to a power system that includes new resources like wind and solar generators, batteries and hydrogen producers is creating higher demand for system strength. This is the power system’s ability to keep the voltage under control in the face of a disturbance. 

System strength is one of the essential services that every power system needs to keep the lights on and there is a finite amount of it on any network. Maintaining it is fundamental to supporting the decarbonisation of the power sector. A lack of system strength can prevent cheaper, lower-emissions renewables getting their energy to market because they have to be turned off to protect the grid.

“Today’s draft determination is designed to deliver much higher levels of system strength than exist currently,” AEMC Chair Anna Collyer said.

“These reforms will mean lower energy costs for consumers because they will lower wholesale energy costs. They are also a turning point for power system security because they shift the focus from the emergency measures of the past to long-term solutions with built-in buffers. The most critical issue in the national electricity market is ensuring a secure system and this is a key focus for the Commission. This work is about providing for future needs as well as today.”

System strength was traditionally supplied by synchronous generators physically coupled to the grid, such as coal, gas and hydro. They provided it by ensuring voltage – which is like the water pressure inside a pipe – had a waveform that was very smooth and didn’t get too big or too small. Many of these generators are exiting the market or scaling back their operations. 

Meanwhile, new non-synchronous resources like wind, solar, batteries and hydrogen facilities are connecting to the system and creating a demand for system strength.

These generators use special electronics and control software to connect to the grid. When there isn’t sufficient system strength, these electronics and control systems may not operate properly, and small disturbances can then get out of control quickly. The exit of the synchronous generators, combined with the entry of the new non-synchronous resources, means that levels of system strength have been declining in recent years – just when more is needed. This has created shortfalls of system strength.

These shortfalls can trigger connection delays and reduce output from those already connected, leading to costs that are then borne by consumers. 

The AEMC plan released today proposes a three-pronged approach to delivering the levels of system strength that we need.

  1. A new obligation on transmission networks to provide the right amount of system strength, when and where it is needed, to keep the power system secure. This will maintain security while avoiding costly delays and constraints. It will encourage the most innovative, least-cost approach to getting generators connected to the system and making sure they can operate effectively once connected.
  2. New access standards for large loads like hydrogen and generators, like utility-scale solar and wind farms, to make sure their equipment uses system strength in an efficient way. This will create a security safety net and reduce the cost of supplying energy because overall demand for system strength will drop.
  3. A new way of charging for system strength. Generators and large loads who use system strength when they connect new resources to the grid, would have a choice. They could pay to use the system strength services that transmission networks will offer. Or they could opt to do their own remediation to provide their own system strength. The cost of keeping the system stable will be built into the transmission charges on customer bills but generators will be asked to offset the cost.

Ms Collyer said the new proposed approach was fundamental to the post-2025 redesign of the national electricity market being spearheaded by the Energy Security Board (ESB), of which the AEMC is a member.

“Our approach here is deliberately forward looking,” Ms Collyer said. “In line with the approach of the ESB, we are using transparent and predictable price signals to drive innovation and improve investment certainty.”

The AEMC previously made system strength changes in 2017 when we stepped in to keep the lights on in the face of unprecedented change in the power system. Since then, it has become apparent that the arrangements have created costs for consumers because they involved reacting to problems when they occurred and slowed down the connection process.

“We have applied some important lessons in evolving the framework for managing system strength, working with stakeholders over the past 10 months,” Ms Collyer said. “Then, we were focussed on managing shortfalls of system strength. Now, we’ve re-oriented the focus to forward planning that will lower the risk of shortfalls happening in the first place.

“The changes we’re recommending set a clear direction for how transmission networks, the Australian Energy Market Operator (AEMO) and new energy generators should work together to keep system voltage stable. Those who create the demand for system strength will still have to pay for this service – they will just pay differently and in a way that is more cost efficient both for them and the system.”

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