The AEMC is seeking stakeholder feedback on potential new mechanisms to better manage risks to grid stability.  

The changing nature of electricity supply and demand, including the influx of variable renewable generation, ageing thermal infrastructure and the rapid growth in consumer-owned distributed energy resources, is creating new risks to the secure operation of the power system.

In a discussion paper released today, the AEMC proposes new and enhanced mechanisms to better manage these risks and make the power system more resilient. 

Stakeholders are encouraged to share their views on potential enhancements to the current system security framework for managing both day-to-day operational risks and the risk of rare, extreme events.

Day-to-day operational risks - such as the loss of a large generator when another large generator is out of action for scheduled maintenance - are known as “credible contingencies”. Under the rules, the market operator, AEMO, must identify and take pre-emptive action to prepare for these types of risks, for example by purchasing additional frequency control services. 

These historic “distinct” risks are still there. But as the power system decentralises, the risk profile of the system is changing. Today, there are many more smaller generators dispersed throughout the system, with variable output depending on the amount of wind and sunshine. This means there is increased uncertainty about the amount of generation that will be available at any one time. 

To help AEMO better manage this increased uncertainty in generator availability during periods of normal operation, the AEMC is proposing to introduce an additional framework to manage new types of “indistinct” risks. The additional framework would set out how AEMO is able to identify risks due to weather events, such as the risk of rapid reduction in output from multiple, smaller generators in destructive wind conditions. Depending on the nature of the risk, AEMO would be able to take appropriate preventative action.

For rare, extreme events – also known as high impact, low probability (HILP) events – the AEMC is proposing to strengthen the frameworks for protected events and the power system frequency risk review

Under these frameworks, AEMO is required to regularly and transparently assess risks to power system operation caused by system frequency events that are unlikely but would have high impacts if they were to happen. If AEMO believes that there are more transparent and cost-effective ways of managing any of the risks it identifies in its power system frequency risk review, it can request that the Reliability Panel declare a risk as a "protected event". The Reliability Panel will then consider the net economic benefits of managing the event as a protected event. If the Panel declares a protected event, AEMO can take additional steps to proactively manage the risk.

In today’s discussion paper, the AEMC has proposed:

  • a broader framework – enabling AEMO to consider a wider range of extreme events - not just those related to frequency. As part of this, AEMO would liaise with distribution networks businesses, not just transmission businesses, to see if certain risks posed by distributed energy resources should be classified as “protected events”
  • a faster framework – streamlining the process identifying and declaring a protected event, once the Reliability Panel has checked it is the most cost-effective solution  
  • a more flexible framework – enabling AEMO to respond to extreme risks to the power system which were not foreseen in its risk review.

To support these changes, the AEMC is also proposing to introduce a new approach to monitoring the stability of flows along interconnectors, which are the major transmission lines that join regions. Monitoring interconnector flows – including when secure limits are breached and by how much - can provide a measure of the “health” of the power system and hence improve the ability of the system to avoid extreme events. The AEMC proposes introducing a standard for interconnector flows that sets out what constitutes a breach of secure limits and related risks. Monitoring would also include public reporting.  

The AEMC will continue to work closely with AEMO on development of these additional tools to help them manage system security at the least cost to consumers. We have also established a technical working group which includes AEMO, AER and experts from generators and networks, as well as representatives of consumer groups and the South Australian government. Minutes of the working group meetings will be published on the project page.

Submissions on today’s discussion paper are due by 6 September 2019.

This work is part of the AEMC's system security and reliability action plan.

Media: Prudence Anderson, Communication Director, 0404 821 935 or (02) 8296 7817


Review of system black event in South Australia of 28 September 2016

This discussion paper is part of the AEMC’s Review of the system black event in South Australia.

COAG Energy Council’s terms of reference for the review require the Commission to draw upon AEMO and AER’s findings into the black system event. With the publication of both the AEMO incident report (in March 2017) and the AER pre- and post-event compliance report (in December 2018) the Commission started its review in April 2019 as required by COAG Energy Council.

The AEMC is considering systemic issues arising from the South Australian black system event including:

  • contingency classification and the pre-event management of risks to power system security
  • system restoration following the black system event
  • market suspension, and
  • arrangements to enhance power system resilience to high impact low probability events.  

In considering these issues, the AEMC is taking a forward-looking approach: we will use the learnings of the system black event to identify least-cost ways of managing the risks of a changing power system.

On 7 August 2019 the AER commenced legal proceedings in respect of market participant compliance during the black system event period. As legal proceedings are currently underway, the Commission is not considering specific issues arising during the period between the loss of the transmission lines in South Australia's mid north and the occurrence of the black system condition. The review is only looking at specific matters in respect of the pre- and post-stages of the event.

Checking in on the AEMC’s 2017 security rules 

Declining system strength and frequency control is emerging as an issue in energy systems around the world as changing technology and consumer choices, combined with government policies, encourage the take-up of renewables and drive big changes in the generation mix.

In 2017 the Commission made new rules to improve system strength and inertia conditions by placing obligations on network businesses to remedy system strength and inertia shortfalls identified by AEMO. The AEMC’s system strength and interventions review is checking in on that reform package to see if the new rules are still optimally targeted given the speed of change underway. 

Also, through our frequency control work plan, we are designing new, coordinated and lowest-cost ways to deliver frequency control services over the medium to longer term. This includes working with AEMO on short-term changes to manage frequency deterioration. As part of this, we will shortly start work on two rule change requests that consider ways to encourage generators to provide frequency control responses.

Contingency events in the national electricity market 

What is a credible contingency event? 

From time to time, the power system may experience significant disturbances where there is a temporary and unexpected imbalance of supply and demand. These disturbances, which AEMO considers to be reasonably possible in the surrounding circumstances, are known as credible contingency events. They may be caused by events such as the loss of a single generator, a single load or a single line in the network. Under the rules, AEMO is required to maintain the power system frequency, voltage and line and equipment loadings within appropriate limits, and to return the power system to a secure state within at least 30 minutes. To do so, AEMO constrains the power system and procures contingency raise and lower FCAS (frequency control ancillary services), which increases or decreases the frequency in response to these more significant frequency variations. 

What is a non-credible contingency event? 

More rarely, the power system can experience very significant disturbances to the supply/demand balance. These events, which AEMO considers are not reasonably possible in the surrounding circumstances, are known as non-credible contingencies. They may include events such as the simultaneous loss of multiple generators, or the loss of interconnection with a neighbouring region as a result of the loss of multiple transmission circuits. 

What is a protected event?

A protected event is lower cost way of limiting the consequences of certain non-credible contingency events. For a protected event, AEMO can use a mixture of ex-ante solutions, such as the purchase of FCAS or upgrading the technology used in emergency control systems, if these have been identified as more cost-effective than the “standard” way of managing the risk - which is typically to constrain generator dispatch. Most recently, AEMO declared a protected event during last week’s destructive wind conditions in South Australia.

Can AEMO reclassify events from non-credible to credible contingencies? 

AEMO currently has the discretion to reclassify contingency events from non-credible to credible. This discretion allows AEMO to reclassify a non-credible contingency event when it considers that the presence of abnormal conditions means that the non-credible contingency is now more likely to occur. AEMO publishes power system security guidelines, which set out its approach to the reclassification of credible and non-credible events. These guidelines define two scenarios that AEMO has considered for reclassification, being the presence of bushfires and lightning near transmission assets (although AEMO may reclassify in light of other threats). The guidelines then set out detailed decision making processes that AEMO will follow in these scenarios.