The Reliability Panel (The Panel) has released a draft report into its review of the reliability standard and market settings (2022 RSS review) for the national electricity market.

The 2022 RSS review considers whether the existing form of the standard and settings are sufficient for future market conditions, particularly given the variables around renewable resources, extreme weather events and limited energy storage. The standard and settings aim to encourage investment in generation or demand response capacity while protecting the market from risk.  

The draft report sets out a number of Panel positions and observations, rather than specific recommendations, for the reliability standard and settings needed between the period of 1 July 2025 to 30 June 2028.  

The Panel will consider the views of stakeholders on the review’s comprehensive modelling work. The Panel will seek that input before making its final set of recommendations. 

The draft report positions are:

Reliability standard 

  • The Panel has not made specific recommendations for the form and level of the reliability standard at this stage of the review.  The reliability standard is based on expected unserved energy in a national electricity market region and set at a level that balances delivering reliable electricity supplies and maintaining reasonable costs for customers. 
  • The Panel considers that due to the energy transition and the growth of variable renewables, there may be a case to change the way the reliability standard is applied and to capture more information about future reliability risks. 
  • The Panel notes the modelling work reveals there may not be a need to change the existing level of the reliability standard for the period of 1 July 2025 to 30 July 2028. The current level is 0.002% unserved energy in a NEM region in a financial year.

Reliability settings 

Market Price Cap and Cumulative Price Threshold

  • The Panel has not formed a view on the specific level of the two reliability price settings, the market price cap, and the cumulative price threshold. Together, these price settings should be sufficient to support investment outcomes, consistent with the reliability standard, while also limiting potential systemic financial risks.
  • The modelling for the review has identified a range of possible combinations that could apply to these market price settings. The Panel is seeking stakeholder input on the modelling outcomes to inform its final recommendation and one that is appropriate for all regions of the NEM. 
  • The IES modelling shows that a range for the market price cap of around $21,000/MWh to $29,000/MWh and a corresponding CPT of $1,359,100 (corresponding to 7.5 hours at the existing MPC) and $4,176,000 (corresponding to 12 hours at a maximum MPC of 29,000/MWh). The existing market price cap is $15,100/MWh. 

Administered Price Cap

  • The Panel’s initial consideration is that the level and form of the APC at $300/MWh may remain appropriate for the period 1 July 2025 to 30 June 2028. The Panel is seeking stakeholder feedback between the draft and final reports to inform further consideration of the APC given recent increases in fuel costs. The existing Administered Price Cap is $300/MWh.

Market Floor Price 

  • The Panel is proposing to retain the existing level and form of the Market Floor Price. The market floor price is -$1,000/MWh. Current analysis suggests there is no sufficient material reason to change it for the review period.  

The review is being undertaken in the context of the existing energy-only market design. The merits and design of a capacity mechanism are not in scope for the RSS review and are a matter for the Energy Security Board (ESB). The Panel is collaborating with the ESB during all stages of the review to ensure all processes and solutions are appropriately aligned and don’t introduce unnecessary duplication. 

The Panel invites stakeholders to engage with the Panel and provide feedback before it publishes its final report on 1 September 2022. 

Submissions to the reliability standard and settings review are open until 7 July 2022. Visit the 2022 Reliability standard and settings review for more information and contact details.