As we get going on our 2019 work program, keeping the power system stable and within its technical limits remains a priority for the AEMC, guided by the frontline expertise of the system operator, AEMO. 

Together with AEMO we are working to keep the rules current so AEMO can manage the changing operational dynamics as more renewables join the grid. We are very focussed on least-cost solutions, bearing in mind that the more costs you put into the system, the greater the burden on consumers.

The key first step is for AEMO to identify the specific nature of system security challenges, which are often very complex, and potential technical solutions. We are working with AEMO and stakeholders to help identify issues and solutions, and then deliver the required tools – through rule changes that provide the right incentives, obligations and safety nets.

As an example, in early January AEMO released its final report on last year’s Queensland and South Australia system separation incident, when a lightning strike on a transmission tower led to a cascade of events resulting in an interruption to electricity supply for some customers in Victoria, NSW and Tasmania. This incident, which had the potential to cause state-wide blackouts, gave new insight into the power system’s resilience to major frequency events and provided evidence of a deficit in primary frequency response from generators across the national electricity market.

As a result of these findings, AEMO has made a number of recommendations, including making sure generators provide frequency control responses where feasible by mid 2019. We will be working closely with AEMO and other stakeholders to deliver rule changes or other regulatory solutions that may be needed within this timeframe.

We will also continue to work with AEMO and the AER on our joint frequency control work plan. This involves designing new, coordinated and lowest-cost ways to deliver frequency control services over the medium to longer term. 

Meanwhile, our assessment of the power system’s safety net – the Reliability and Emergency Reserve Trader (RERT) continues, with a draft determination on AEMO’s rule change request to enhance the RERT due by the end of January. AEMO and other stakeholders have been providing technical advice on the best way to procure standby electricity reserves and whether the RERT is operating efficiently and effectively. We will welcome further input on our draft findings.

Stakeholders may have also seen a number of rule change requests arrive just before Christmas from AEMO to keep regulatory frameworks up to date. These include a proposal for a new short term forward market, as recommended in the AEMC’s Reliability frameworks review. This would provide an AEMO-operated platform so market participants can contract for electricity in the week leading up to dispatch. A short term forward market allowing market participants to fine-tune previously traded positions or to hedge against volatility ahead of real time could improve the market and AEMO’s ability to deliver reliable electricity supply to customers, and also enable more demand response. 

AEMO has also submitted a package of four rule change requests to improve processes related to AEMO’s interventions in the market, for example the way generators and demand response providers are compensated after a direction from AEMO to help maintain system security or reliability. 

In addition, AEMO has proposed a rule change to allow developers of new generators to register with AEMO to get access to key technical information such as network modelling data, on a confidential basis. This would give developers a better understanding of the technical requirements for connecting generators. 

All of these rule change requests will be initiated early this year for stakeholder consultation.

These projects are only part of the market bodies’ huge work program to help keep the system secure and reliable, while keeping the cost of transition as low as possible for consumers. For more information on our recent projects see our Security and reliability action plan

Anne Pearson, Chief Executive, AEMC

Media: Jessie Foran, Strategic Briefings Specialist, 0459 062 751; 02 8296 7864