To keep the lights on, the power system needs to be:

  • secure – able to operate within defined technical limits, even if there is an incident such as the loss of a major transmission line or large generator
  • reliable - have enough generation, demand response and network capacity to supply consumers.

System security

What is system security?

The power system is secure when technical parameters such as voltage and frequency are maintained within defined limits. To maintain frequency the power system has to instantaneously balance electricity supply against demand.

Large deviations or rapid changes in frequency can cause the disconnection of generation, potentially leading to cascading failures and ultimately a ‘system black’.

Historically, spinning generators, some motors and other devices synchronised to the frequency of the electricity system have naturally provided the services, for example inertia, necessary to allow the system to cope with uncontrolled changes in frequency.

However, the power system is transforming – we are seeing the widening effects of increased non-synchronous generation, such as wind and solar, and the exit of coal-fired generation.

In a market with high penetration of wind and solar, there is less inertia in the power system. This means when there is a major fault in the power system (a security event) it is harder to recover – because due to the physics of the power system you have less time to recover before a widespread blackout.

The reduction in synchronous generation has also led to a decrease in system strength in some areas of the power system. System strength relates to the size of the change in voltage for a change to the load or generation at a connection point.

A reduction in system strength in certain areas of the network may mean that generators are no longer able to meet technical performance standards and may be unable to remain connected following a large disturbance to the power system such as a major storm. It may also lead to voltage instability and a reduction in the effectiveness of the protection systems used by network businesses, generators and large customers.

What is the AEMC doing?

Finding new ways to provide inertia, respond to extreme frequency changes, and address issues around system strength is underway.

The AEMC’s system security work program is focused on developing market frameworks which allow continued take-up of new generating technologies while keeping the lights on.

Many different technical options are emerging in today’s electricity sector and we want to support further innovation. We need market mechanisms that reward the best options at the least cost to consumers.

Our power system security report sets out a package of reforms to guard against technical failures that lead to cascading blackouts, and to deliver a more stable and secure power supply to Australian homes and businesses. This includes a number of new rules to deliver a stronger, more stable power system:

  • In March 2017 we made a final rule to help protect the power system from emergencies through a new management framework for emergency frequency control schemes. These are ‘last line of defence’ mechanisms such as controlled load shedding, designed to protect against a major blackout if a sudden and unexpected loss of generation or load causes rapid changes in system frequency. The new rules require the Australian Energy Market Operator (AEMO) to regularly and transparently assess emerging risks caused by swapping out older synchronous generators, for non-synchronous generation technology like wind and solar.

In September 2017 we made final rules to:

  • manage power system fault levels – keeping the system stable by making networks provide minimum levels of system strength at key locations, and requiring new generators to pay for remedial action if they impact system stability
  • improve guidelines for generating system models – requiring generators and networks to provide more detailed information about how their equipment performs so AEMO and networks have the right data to efficiently plan and operate the system

In May 2018 we published a draft determination on changes to technical performance standards for generators seeking to connect to the national electricity grid, and the process for negotiating those standards. A final determination is due in October 2018.

Our Frequency control frameworks review is underway, which is looking at ways to integrate new technologies and demand response to help keep the system secure, as well as considering new ways to deliver more inertia where this provides additional benefits to the system. A draft report was published in March 2018 and a final report is due in July 2018.

In March 2018 we published a consultation paper on a request from the COAG Energy Council to establish a national register of distributed energy resources, including small-scale battery storage systems and rooftop solar. The register would give AEMO and distribution businesses more data to help with day-to-day operations to keep the power system secure and safe. A draft determination is due in mid 2018.


What is reliability?

While ‘security’ relates to the stability of the power system, ‘reliability’ of the power system is about power when you need it: having enough generation, demand response and network capacity to supply consumer needs.

How are reliability levels currently set?

The reliability standard currently requires there be sufficient generation and transmission interconnection such that 99.998% of annual demand for electricity is expected to be supplied.

Put another way, the standard specifies the maximum expected unserved energy (USE), or the amount of electricity demanded by customers which is at risk of not being supplied. It is currently set at 0.002% of the region’s annual energy consumption in a financial year.

The reliability standard is contained within the National Electricity Rules. The Reliability Panel reviews the standard and associated settings every four years.

State and territory governments set the level of reliability that must be provided by transmission and distribution networks (‘poles and wires’).

What is the AEMC doing?

In tandem with our system security program, the AEMC is undertaking a system reliability program, which includes:

  • Reliability frameworks review – which is considering the regulatory and market frameworks needed to support a reliable supply of electricity as the power system transforms to include more variable, intermittent generation and demand-side innovation. The AEMC intends to publish a final report in mid 2018.
  • Review into the coordination of generation and transmission investment – which is investigating options to improve the coordination of generation and transmission investment, including potential renewable energy zones, transmission pricing and access. A final report is due to be published in mid 2018.

The AEMC's Reliability Panel has published its 2018 review of the reliability standard and market price settings – a set of parameters that bear on price, investment and ultimately reliability in the national electricity market. 

In December 2017 we made a new rule to redefine the conditions when AEMO it can declare a lack of reserves (LOR) and signal to the market that electricity reserves are running low. 


Prudence Anderson
Communications Director
Ph: 0404 821 935