Priority area: generation access and transmission pricing
Our power system is moving from a small number of large generators, concentrated in regions with access to coal, to a large number of small generators that are far more geographically dispersed and in places where the sun shines and the wind blows. Over the next 10 years, the amount of proposed new generation wanting to connect is roughly equal to the current size of the National Electricity Market (NEM).
The work we are doing in this area is focused on making sure there is adequate investment to build a bridge between new and old energy in the system. We are considering regulatory changes to underpin the right investment in the right place at the right time. If we don’t reform generator access and transmission pricing consumers or taxpayers will bear the majority of transmission investment risk, and will foot the bill if transmission lines become 'roads to nowhere'.
The AEMC is working with the Energy Security Board, Australian Energy Market Operator (AEMO) and the Australian Energy Regulator (AER) to develop a framework to underpin an orderly power system transition under a range of future scenarios.
AEMO’s Integrated System Plan provides a useful starting point for thinking about what the grid may look like in the future and prioritising new transmission infrastructure that might be needed between now and then to support new generators.
To support the most efficient delivery of new transmission infrastructure, the AEMC is prioritising reforms to generator access and transmission pricing - that is, the process by which generators access or connect to the transmission network, how much it costs and who pays for it.
If we don’t reform generator access and transmission pricing consumers or taxpayers will bear the majority of transmission investment risk, and will foot the bill if transmission lines become 'roads to nowhere'.
Current AEMC projects
Current AEMC projects to help reform generation access and transmission pricing include:
- Coordination of Generation and Transmission Investment (CoGATI) implementation – access and charging review; the shape of the power system is changing and this means the way transmission and generation investments are planned and paid for must also change. The AEMC has proposed reforms to the way generators access and pay for transmission infrastructure that aim to give new connecting generators more certainty around getting their energy into the grid and delivered to consumers and reduce the costs and risks for consumers when it comes to building and funding new transmission infrastructure. This project is all about avoiding unnecessary costs being imposed on consumers through poor planning.
- Transmission loss factors rule requests: when a participant is deciding whether and where to build a generator, one of the factors they consider is the loss factors that generator will face when transporting their electricity to where it is used by customers. When you transport electricity across a network of poles and wires, some of it is lost as heat. The further the electricity has to travel, the more heat is lost. Losses also increase if lots of generators connect in the same area and transmission lines become more heavily loaded. Loss factors are calculated so customers don’t pay for power they don’t get. Two rule change requests currently under consideration seek to change the way loss factors are calculated and redistributed
More information about what the AEMC has done to support efficient and coordinated investment in generation and transmission infrastructure.
AEMC’s system security and reliability action plan
This is part of the AEMC’s broader system security and reliability action plan. We are developing market frameworks which allow continued take-up of new generating technologies while keeping the lights on at the least cost to consumers.