The Australian Energy Market Commission (AEMC) has made a draft determination and draft rule to change the way the system strength quantity (SSQ) component of the system strength charge is calculated.
The system strength framework gives generators and certain large loads a choice between two options to reduce their system strength impact on the power system; they can either pay the charge for centrally provided system strength services, or they can take proactive measures to self-remediate by installing synchronous plant, like a condenser or grid-forming battery.
Having this choice encourages investors to make efficient decisions when connecting new plant or making alterations to existing plant. This ultimately leads to lower cost provision of system strength across the power system.
But to make efficient decisions about whether to remediate or pay the charge, connection applicants need the options to be equivalent – and currently, they are not.
The draft rule makes the two options equivalent as originally intended and makes arrangements for the SSQ calculation to evolve in line with our knowledge of system strength, the technologies that provide it, and the policies that govern its provision.
Specifically the draft rule:
- Shifts responsibility for determining the SSQ calculation from the National Electricity Rules (NER) to the Australian Energy Market Operator (AEMO), integrating it into the system strength impact assessment guidelines (SSIAG)
- introduces new policy principles in the NER to guide AEMO in SSQ methodology, offering clarity to stakeholders.
- clarifies the process of moving from an indicative to a final SSQ
- Implements transitional arrangements for applicants mid-connections process
- triggers an update to AEMO's SSIAG paving the way for the new measures to take effect on 1 July 2024.
As the electricity sector decarbonises, significant investment in new generation is required.
A substantial volume of this generation is forecast to be lower-cost, inverter-connected generation such as batteries, wind, and solar.
Connection of this generation will necessitate investments in system strength services to ensure the secure operation of the power system.
The draft rule would enable connection applicants to make efficient decisions on how to address their plant’s system strength impact.
This will lead to lower-cost provision of system strength across the power system and better outcomes for electricity consumers as the power system transitions.
The draft rule has been made under a fast track rule change process in recognition of the consultation already carried out by AEMO during the development of its SSIAG. We are seeking feedback on the draft rule with submissions due by 18 January 2024.
If made, the draft rule may significantly affect the system strength quantity’s value, impacting the total charge paid by connecting generators choosing that option.
AEMO and the Australian Energy Regulator (AER) have introduced an interim solution to facilitate the progress of connection applications during the rule change process:
- an AEMO guidance paper proposing a revised SSQ calculation
- communication from the AER to Network Service Providers (NSP’s), that it won’t take action for non compliance if AEMO’s proposed methodology is followed. The AER will re-evaluate its stance on compliance once the AEMC issues the final rule change determination.
For more information and contact details visit the project page here.
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