Reliability Panel commences Annual Market Performance Review

02 February 2023

The Australian Energy Market Commission’s (AEMC) Reliability Panel has commenced work on its Annual Market Performance Review of the National Electricity Market (NEM) for the 2022 financial year period.

The review will include an assessment of the performance of the power system against reliability, security and safety measures, providing information, insights and analysis in one place for energy market participants to access.

The review also provides an opportunity to take learnings from events that have occurred in the NEM over the reporting period, such as the June 2022 market suspension event.

Information for the review is drawn from a number of sources, including reporting data from the Australian Energy Market Operator (AEMO), the Australian Energy Regulator, jurisdictional regulators and other market participants.

While formal stakeholder submissions are not being sought, the Panel welcomes comments on its approach and on issues to be considered by the Panel.

The review is carried out under standing Terms of Reference issued by the AEMC. The Panel expects to publish the review in late March.

Read more about the Annual Market Performance Review.

Media: Jessica Rich, 0459 918 964, media@aemc.gov.au
 

Shannon Culic

Shannon Culic

Benn Barr, CE at State of Energy Research Conference ERICA

31 January 2023

Before I begin, I would like to acknowledge the Gadigal people of the Eora nation, on whose land we meet today. I pay my respects to their elders past, present, and emerging, and to any other first nations people present today.

2023 marks a crucial turning point in the energy sector in Australia.  We all understand the scale of the transformation required to 2050. Not just for the energy sector but for the Australian and global economy more broadly.

We all have a critical role to play in it. Perhaps none more so than the research sector. Practitioners such as the AEMC rely on you to push our thinking out further than anyone has – to question and challenge and provide new perspectives.  

We all need to find new ways to collaborate and cross-pollinate between research, policy and practice if we are going to make the most of the transition.

The AEMC is an independent authority, a market body, with a five-member Commission. We act as the NEM’s rule maker, governed by the national energy objectives, which cover affordability, reliability and security and are soon expanding to include emissions reduction targets. That new role is a profound change for the AEMC and the energy sector.

We have a very complex, interrelated and interdependent work program, so we like to organise our priorities into themes that help us stay focused on the bigger picture. Currently those themes are – Transformation, Resilience, and Innovation. You could call these the three things of which we are certain in an otherwise highly volatile space.

We know we need to fundamentally transform Australia’s power system, and we know that to achieve that we have to make the system more resilient – to smooth out the bumps as we go, without the help of big spinning machines. Which means that the third thing we are sure of is that innovation is absolutely essential to a resilient transformation.

Today I’ll cover where we think the top research priorities might be, based on these themes. I’ll also share what we believe to be the biggest opportunities for research to make a lasting difference to outcomes for Australia’s energy transformation, that is, working to accelerate the delivery of change, and working to better link research with practice.

Before I do, though, I’d like to make it clear just how incredibly important your research – all research – is in the energy transition. The work you do, broadening our field of knowledge, allows what seemed impossible to become practical.

The energy sector has many great examples of this, but I wonder if everyone in the research sector is aware of how directly your work can penetrate the power system?

Here’s just one ‘for instance’: in 2019, Dr Peter Sokolowski – who is a research fellow in the School of Engineering at RMIT University – submitted a rule change to us as a private individual.

His work had shown that the deterioration of frequency control in the NEM was undermining predictable dynamic response, and affecting the security of the power system.

We consolidated his rule change request with a related request from AEMO and decided it should be mandatory for semi-scheduled and scheduled generators to provide frequency response in the NEM. Last year we also introduced incentives to encourage participants to provide primary frequency response.

Not only was the rule change request informed by his research, but we also benefited from Dr Sokolowski’s insights when he joined our technical working group for the project.

So - there’s a very close relationship between research and rule-making. On a day to day basis, we work with many academic researchers, formally and informally, and in a number of ways:

  • to build our knowledge and expertise
  • to open the way to researchers running live trials in the NEM
  • and to help implement successful pilots as innovations within the power system.

And as much as we’re already intersecting with research – we still want to do more. Here are five recent and upcoming initiatives that you might want to jot down and look for on our website:

  1. In 2021, we launched a Connecting Policy and Research Program and received funding support from ARENA. We’ve started work with Monash University, Professor Guillaume Roger (economist) on wholesale market design with high VRE and storage, including:
    • investigating how storage interacts with wholesale market design
    • trying to answer the question of how we can get the incentives right for storage to operate efficiently in the future system.
  2. We are in the process of establishing an AEMC Postgraduate Summer Internship program to introduce PhD and Masters students in economics and related fields to the energy sector.
  3. We will also be introducing an AEMC Research Seminar Series where academics and AEMC staff can share and develop their research in an intellectually honest and challenging environment.
  4. We will also be working more closely with innovators – from innovators in energy monitoring to those in home-energy-management services. This is with a view to discussing the barriers and opportunities for great research and ingenuity.
  5. And while this isn’t just the AEMC’s work, another new resource is the online Energy Innovation Toolkit, which lets you test your new approaches, sandbox-style, in relation to regulatory frameworks. In fact, the AER, which led this project, has a session coming up today to explain the toolkit in more detail.

So - if you’re interested in connecting with us in any of these ways, please get in touch via our website. There should be more information there today under the AEMC News Centre.  

Coming back to the main speaking brief, I was asked to identify the research we most need in the next 10 years. That’s a bit like asking who’s your favourite child! However, some areas our economists highlighted include:

  • how people change their behaviour outside of price signals
  • ways to align consumer incentives with the needs of the overall system
  • ways to decrease the national construction load required for 2050 targets
  • ways to operate the system with high levels of VRE and no big spinning machines
  • ways to make better energy market models that combine increasing uncertainty over climate conditions with changes in generation technologies
  • how to understand bidding strategies for renewable generators and storage in a 100% or near 100% renewable energy system
  • and - ways to facilitate investment in volatile economic, policy and technical environments.

It’s a solid list. It involves many of you here. We need all this, of course, as well as ongoing innovation in everything from renewable gases, to meteorology, to artificial intelligence.

That’s the nature of research in the energy sector though, isn’t it? It really is like the old question of ‘how long is a piece of string?’ There’s never a shortage of problems seeking solutions.

And at the moment, energy is even more demanding of answers because of factors like the recent market suspension, war in Europe, extreme weather impacts, the pandemic era and one of the world’s most ambitious economic transformations in history.

Earlier I introduced our three theme approach to keeping the complex AEMC work program on track and focused on the long-term goals:

  • net zero by 2050,
  • lights on,
  • affordable energy.

Even though we need all your research, I can narrow that list via our three themes to three areas where we are most eager for advice and evidence to build policy:

  1. Our first theme is Transformation, and in the context of research, the transformation we most need is around consumer behaviour. We need your research to help us better understand consumers’ future interactions with energy and technology –
    • We have to always keep in sight: the transformation won’t happen unless it works for the users of energy. Lynne will talk to you about the ‘imaginary friend’ factor, and no one knows more about energy consumers than Lynne and the ECA. Those users of energy are real – we are real – and many of our decisions at the AEMC rely on understanding human responses to energy market changes.
    • Our roadmap, AEMO’s ISP from 2022, relies on an active demand-side market and consumer resources that can be orchestrated across the network.
    • So much is still based on our ‘best guesses’ of how human behaviour can help transform the power system.
    • For instance, electric vehicles. We want them to behave as battalions of mobile batteries, but will consumers really behave that way once we have enough EVs in the market to make a difference? Pardon the pun, but what would drive them to turn their car to the service of the grid while it’s idle?
    • Some areas the AEMC has been aiming to facilitate ongoing consumer engagement with the market include the work surrounding the Wholesale Demand Response mechanism, as well as upcoming work on Unlocking CER Benefits through flexible trading. These projects are providing the groundwork for more effective consumer interaction with the market.
  2. The second theme we are working to, is Resilience. And for research, there’s no greater need around resilience than helping us learn how to operate a power system with 95% to 100% variable renewables and no big spinning machines. How does it deliver the resilience that we need to keep the lights on?
    • Right now, the system is dominated by variable renewables. It’s not a future proposition. Last week, AEMO marked that in Q4 of 2022, renewables provided more power to the NEM than black coal.
    • We’ve never operated a grid with a scarcity of ‘big spinning machines’ and we need research that builds our confidence and capabilities. Essential system services – ESS – is a very large area, but as an example, recent trials of retuning or ‘tweaking’ of inverters have been helpful to our work.
    • ARENA has supported a lot of research in this area and recently released power system CAD reports that have provided useful assessments of grid-forming batteries. (PCSAD assessment). The AEMC is also participating in ARENA’s dynamic operating envelopes workstream group, aiming to improve CER integration into the grid.
    • Another resilience area we need to know more about is the role of storage short and long-term in a fully renewable power system. ISP says storage capacity must jump 30-fold. 2GW now to 15GW in 2030 and over 60GW in 2050. We’re very interested in the future role of domestic and community batteries in this space. A recent paper from AEMC economists suggests the affordability turning point for domestic batteries is a lot closer than most people – who equate batteries with Tesla – would think.
  3. To our third theme now, Innovation, and we’re hard-pressed to see a greater need for innovation currently than in new concepts and tech that will lighten the massive construction schedule in front of us. Anything you can discover or devise to help more efficiently and effectively reduce the amount of ‘stuff’ we need to build by 2050.What’s on the plan right now is like the moonshot plus the Manhattan Project. Add WW2 reconstruction to the scope of the work, and you’re getting close to the magnitude of the energy transformation in Australia.
    • So much to build in such a short time. I mentioned the ISP earlier,  regarding storage capacity… that’s just one multiplier for construction. Then there’s the goal of distributed solar PV doubling by 2030 and doubling again by 2050 to about 70GW. And of course, the massive poles and wires build: around $14 billion is estimated just for new transmission infrastructure.
    • It’s a mammoth task. However, we’re starting to get a sense that the more confident we become in managing a high VRE system, the less we may we have to build. For instance, if we can be certain that tweaking inverters will give us the system strength we need, we may then need fewer back-up options.
    • Research into innovations that save us time, materials and dollars during this enormous construction phase will be welcomed by governments and the market, and will pay lasting dividends to consumers – that is, we humans who will, ultimately, be paying for it all.

However, as pressing as our need for research from those three areas is, the biggest opportunities for research in the next 10 years are likely to be in what may seem the least exciting area – the institutional space.

While more technological innovation is expected and welcome, today, and for the next few years, we do already have substantial apparatus in place to help achieve carbon-abatement goals and redefine the power systems of the past.

Barriers exist when it comes to deploying this apparatus at scale and in a way that presents solutions that are sustainable, fit-for-purpose, and equitable.

So - the greatest gains the next decade of research can offer might not be in technology, but in the ‘missing link’ between trials and deployment.

We need to work on ways to successfully deploy the technological and social change necessary to meet our goals in time. We need research into real-world implementation via public policy, regulatory frameworks, effective institutions, financing schemes, social licence, and equitable access to efficient energy.

This means less emphasis on the questions around ‘What must be done?’ and more on ‘How quickly can we make it happen?’ and ‘How do we make sure it beds down and keeps working?’

There’s a related aspect to this for you as researchers. The energy sector has to move fast. Governments across Australia are largely aligned and keen to act. This means that the most successful research projects of any kind in the next decade will have their transition to policy ‘baked in’ from the start. A ‘pilot-to-policy’ approach will be one of the smartest ways to ensure your research contributes quickly and effectively to the energy transformation.

  • An example I was given of a trial that considers regulatory barriers and enablers is the UNSW SolarShift project, orchestrating household electric hot water heaters into mega batteries. Work like this informed our 2021 rule change, allowing greater integration of innovative storage into the NEM.
  • Another for instance: the AEMC is also focusing on more effectively incorporating consumer and community perspectives into the decisions we make. Recently we targeted engagement with consumers to navigate short-term challenges in amending the administered price cap rule change.

In the end, no matter how great and compelling the research, you’re probably going to have to come to the bureaucrats to see your insights applied to the grid. The good news is, our arms – and our minds, I hope – are open wide. In the words of Jerry McGuire, however, you may sometimes have to help us, to help you.

To recap. I shared our key themes and how they relate to research priorities for the NEM.

  • Transformation – our greatest need is to better understand consumer behaviour in the real-life changes that are charging down the decade towards us
  • Resilience – our greatest need is to demonstrate ways to manage system strength and other essential services in a 100% VRE grid
  • and in Innovation – our greatest need is to lighten our construction load with the most efficient infrastructure build imaginable.

And then I raised the great opportunities presented by a missing link: the need for highly effective deployment to effect the success of all the above; both the energy transformation and the outcomes of your research. In this, we suggest:

  • More work on pilot-to-policy approaches to increase likelihood of deployment
  • More research should consider what structures are needed to plug the new learning from successful trials into the energy markets via rules, investment and consumer attitudes
  • And more focus on cross-pollination of motives and ideas between regulators and researchers for mutual benefit and efficiencies.

As part of this, please consider your relationship with the AEMC and other market bodies in your research plans.

I’ll close with a reminder of some very direct ways to connect with us via:

  • Upcoming seminars for researchers and innovators
  • Postgraduate opportunities with us next summer
  • Joining our research partnership program, and more…
  • Check out the information under our News Centre on the AEMC website.

Thank you.

Pilot to policy research crucial to energy transformation

31 January 2023

The Australian Energy Market Commission (AEMC) is calling on Australia’s brightest academics to collaborate with the rule-maker to develop more ‘pilot-to-policy’ approaches to ensure their research contributes quickly and effectively to the energy transformation.

In a keynote speech delivered to the ERICA - State of Energy Research Conference at UTS today, the AEMC’s Chief Executive Benn Barr, claimed the greatest gains the next decade of research can offer might not be in technology, but in the ‘missing link’ between trials and deployment.

“The energy sector has to move fast. Governments across Australia are largely aligned and keen to act. This means the most successful research projects of any kind in the next decade will have their transition to policy ‘baked in’ from the start,” he said.

Mr Barr cited the UNSW SolarShift project, which looked at turning household electric hot water heaters into mega batteries, as an example of the close relationship between research and rule-making. He said the work informed a rule change by the AEMC in 2021, allowing greater integration of innovative storage into the National Energy Market (NEM).

Mr Barr went on to announce five initiatives to connect researchers with the AEMC – an independent authority governed by the national energy objectives, soon to include emissions reduction targets.

“As much as we’re already intersecting with research – we still want to do more.  The work you do, broadening our field of knowledge, allows what seemed impossible to become practical,” he said.

The initiatives include:

  • Connecting Policy and Research Program (with support from ARENA and Monash University), on wholesale market design with high VRE and storage, including:
    • investigating how storage interacts with wholesale market design
    • trying to answer the question of how we can get the incentives right for storage to operate efficiently in the future system.
  • AEMC Postgraduate Summer Internship Program (2023-2024) to introduce PhD and Masters students in economics and related fields to the energy sector.
  • AEMC Research Seminar Series where academics and AEMC staff can share and develop their research in an intellectually honest and challenging environment.

Additional work will be carried out with innovators via a forum facilitated by the AEMC, with a view to discussing the barriers and opportunities for great research and ingenuity.

A new online toolkit, led by the Australian Energy Regulator (AER) with the support of the AEMC, will also enable researchers to test their new approaches, sandbox-style, in relation to regulatory frameworks.

Mr Barr claimed 2023 marks a crucial turning point in the energy sector in Australia and researchers have a critical role to play in the transformation required for 2050.

“Practitioners such as the AEMC rely on you to push our thinking out further than anyone has – to question and challenge and provide new perspectives.  

“We all need to find new ways to collaborate and cross-pollinate between research, policy and practice if we are going to make the most of the transition,” he said.

Those interested in applying for the AEMC initiatives can register via Research@aemc.gov.au

MEDIA: Jessica Rich, 0459 918 964, media@aemc.gov.au

Forum: ​​Unlocking CER Benefits through Flexible Trading rule change​

Summary

Date:
06-Feb-2023
Start Time:
1:30 pm AEDT
End Time:
2:30 pm AEDT
Convenor:
AEMC
Reminder:

The AEMC would like to invite stakeholders to an online public forum on the consultation paper for the Unlocking CER Benefits through Flexible Trading rule change. 

The purpose of this forum is to answer questions about the consultation paper to assist any interested stakeholders in drafting submissions, which are due 16 February.  

In light of this, the forum will be focused on a Q&A format – we will assume that attendees have read the consultation paper in advance, and use the majority of the time for questions from stakeholders. 

In addition to raising questions during the forum, we encourage stakeholders to submit questions in advance, by email to Jessica.Curtis@aemc.gov.au no later than midday AEDT, Friday 3 February.  

We note for attendees that we are still at the consultation stage, and therefore will not have any updated Commission views to share during the forum.  

The public forum will be held virtually, a confirmation Zoom link will be sent via email prior to the event. Please register your interest by completing the form below by midday AEDT Friday 3 February 2023. 

Visit the project page for the consultation paper, AEMO’s rule change and contact details for the project.  

Registration

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The AEMC welcomes appointments to the Reliability Panel

25 January 2023

The Australian Energy Market Commission is pleased to announce the appointment of Origin Energy’s Keith Robertson as the Market Customers representative to the Reliability Panel.  

Mr Robertson returns to the role as the Reliability Panel's Market Customer representative following a robust selection and voting process. 

Mr Robertson has more than 20 years' experience in the energy sector and has held senior positions in strategy and development, energy trading and sales and marketing. He is currently General Manager Wholesale Risk and DER at Origin Energy. 

The process for the appointment of representatives to the Reliability Panel can be found in the National Electricity Rules.

For information on the current Panel Members see here.

Media enquiries: media@aemc.gov.au

Rachel Thomas

Rachel Thomas

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