As we head into the summer break with temperatures forecast to reach unprecedented highs, the reliability and security of the power system is top of mind for everyone working in the energy industry.
As AEMO announced this week, 125 MW of reserves have been secured through off-market generation and demand management contracts as well as 1500 MW of short and medium notice RERT agreements across the NEM – 1000 MW of which will be available for Victoria and South Australia to cover extreme heat risk.
AEMC’s extensive reliability and security program includes a focus on both long-term settings and emergency/interim measures needed to cover all bases while the energy system transitions and deals with more extreme weather.
Earlier this year we announced reforms to the operation of emergency reserves in the power system aimed at making it a more effective way to minimise power disruption to homes and businesses in extreme weather events. This work included changes to allow AEMO flexibility to procure power supplies at minimum cost.
Today we announce an interim measure for Victoria providing AEMO with additional flexibility to enter into multi-year contracts to secure emergency supplies over longer periods addressing the short- to medium-term reliability challenges in that state.
Also, today we are calling for your feedback on two draft rules to boost the power system’s predictability.
The first draft rule would require electricity generators to respond automatically to changes in power system frequency. This addresses an immediate need for improved frequency control which has been identified by AEMO as an urgent priority.
The second draft rule is designed to strengthen the framework for system restart services which are used to kickstart the power system if there is a major blackout.
Also published today is the Reliability Panel’s final report for its review of the template for generator compliance programs. The template supports system security by helping generators meet their performance obligations. It’s part of the implementation of the new generator technical performance standards rule that updates connection standards in line with Finkel review recommendations. This work is part of a big program of change to address the large number of new generators including wind and solar farms which are set to connect in coming years while older power stations are retiring. All the market bodies are focused on having the right technical standards so these new generators can join the power system at the lowest possible cost while maintaining security.
Of course, given the rate of change ahead of us all - there’s much more to do.
Last week we published a final report on Mechanisms to enhance resilience in the power system. This review, requested by the COAG Energy Council, asked us to draw upon AEMO and AER’s findings into the system black event in South Australia in 2016. We have used the learnings of that event to recommend a range of changes to the power system’s security framework and map out an ongoing work program on power system resilience. Working in partnership with the Energy Security Board, AEMO, the AER, industry, governments, consumer groups and other stakeholders, as well as the review’s technical working group, we will progress a package of projects and rule changes to complement the extensive work already underway to secure the system.
As with all our rules and recommendations, our focus is on what it means for consumers. People want power to be there when they need it – especially on very hot days – but they shouldn’t have to pay more than necessary. That’s why the AEMC scrutinises every proposal and works with the other market bodies and stakeholders to find the least cost solution.
And it’s why we’ll be amping up our efforts next year on a new approach to better manage demand so we can stretch supply further to reduce both risk and cost. Building on our information paper on a two-sided energy market, we’ll be working with the Energy Security Board and AEMO on innovative ways to enable consumer demand to interact directly with supply to set real-time prices.
Complementing this will be our work on reforms to enable electricity networks to become grid-enabled trading platforms, as set out in our Grid of the future review. Reforms to distribution system access and pricing arrangements can deliver significant benefits to all energy systems users. As an example, instead of paying for energy consumed, customers would pay for access to the services they need from the network and be rewarded where they can provide services back to the grid. By making the most of what we’ve got, the grid can operate more efficiently, which means lower prices for all consumers. We are also working on a proposed access model through our COGATI review, which will assist with better managing the costs and risks of getting new large-scale generation and storage into the market. A short update paper on this was published today.
With 13 rule change projects currently underway, and more than 10 pending, along with numerous reviews and work plans, the AEMC’s high work rate will continue – which is to be expected given the major transformation underway in the power system.
We recognise the demands this is placing on our stakeholders – governments, consumer groups, industry, environment groups, investors, and the other market bodies. We’ll be looking for every opportunity to streamline our consultation processes and make it easier for stakeholders to provide input and feedback.
A huge thank you to everyone who has supported our work this year – through submissions, meetings and briefings, participation in forums and webcasts, data surveys and responding to our surveys on ways to improve our engagement processes.
Have a wonderful and safe Christmas and New Year.