Investigation into system strength frameworks in the NEM: final report

The Australian Energy Market Commission (AEMC) today released a plan to stabilise the power system as the market transformation accelerates.

Our proposals evolve the framework for managing system strength.

System strength is an essential service that every power system needs. It is all about keeping voltage under control in the face of disturbances, as well as maintaining stable operation more generally.

AEMC Acting Chair, Merryn York, said the plan was the result of extensive collaboration to understand stakeholder issues and develop a better way forward.

“The changes we’re recommending will improve the connection process for new generators and set a clear direction for how transmission networks, the market operator and generators should work together to keep system voltage stable” she said.

“We’ve applied important lessons since we stepped in three years ago to make urgent system strength changes as stability problems emerged in the power system.

“Now we are looking to the future.”

The changes establish:

  1. a network planning standard for higher levels of system strength in the grid, 
  2. new technical standards on generators connecting to the grid, and
  3. mechanisms to coordinate supply and demand with the costs shared between new generators and customers.

Higher network planning standard

  • AEMO to release an annual system strength report using ISP inputs to assess nodes where the planning standard will apply
  • Transmission network businesses must put options in place to meet the higher system strength requirement determined by the new standard

New technical standards on connecting generators wanting access to the grid.

  • Short circuit ratio measurements - requiring generators to make sure they can maintain stable operation even in lower system strength conditions.
  • Voltage phase shift – requiring generators to maintain continuous operation following a large shift in the phase of voltage.

Improved coordination between system strength supply and demand

  • The solutions procured by transmission network businesses are coordinated by AEMO through the central dispatch process, to make sure the system stays safe and secure.
  • The system strength mitigation requirement shares the cost of system strength between consumers and generators and includes the establishment of system strength zones to help create clear price signals for generator investment based on their relative need for system strength support.

Next steps

The AEMC’s work complements and is consistent with the Energy Security Board’s program to design what essential system services will look like in a post 2025 energy market. Our work on investing in system strength has been prioritised in response to stakeholder feedback that provision of system strength is an urgent issue and should be resolved as soon as possible.

An AEMC public forum will be held on 22 October 2020 in order to seek stakeholder feedback on the direction set out in this report. Registrations for this can be made on our website. 

Based on the high level design of the evolved framework set out in this final report, we will continue to develop the next level of detail of these reforms, as well as any transitional mechanisms, through the rule change request we have received from TransGrid.

Stakeholders then be invited to provide formal submissions to the draft determination of that rule change.

Why we need these changes

  • In the past, system strength was a natural by-product of generation such as coal, gas and hydro. We need to manage the power system differently as it moves to a greater penetration of new technologies that don’t have system strength embedded in their way of operating.
  • Australia has particular system strength challenges due to its long stringy electricity grid and one of the fastest rates of energy market transformation in the world.
  • These changes address problems experienced by generators who have faced costs and time delays in connecting to the grid. Having to procure system strength when it becomes a problem, rather than ahead of time, has led to unforeseen costs. Obligations on transmission businesses and the market operator, AEMO, have not always been clear and it has been hard to achieve economies of scope and scale
  • These changes will secure enough system strength services to keep the system secure, and support more timely connection of new generation so consumers can benefit from having more cheaper and lower emissions generation. The changes will also help to manage demand for system strength, so this valuable resource is used as efficiently as possible.