AEMC system security and reliability action plan
Our system security and reliability work program is focused on developing market frameworks which allow continued take-up of new generating technologies while keeping the lights on at the least cost to consumers. Key projects are:
Investigation into intervention mechanisms in the national electricity market
In August 2019 the AEMC published a final report which sets out a number of recommended changes to the interventions and compensation frameworks in light of the growing number of directions being issued by AEMO to maintain system strength. As part of this work, the AEMC is progressing two rule requests from AEMO which seek to amend both the interventions and related compensation framework. The report recommends that AEMO submit additional rule change requests that would further improve the interventions framework by - among other things - changing the basis on which compensation for directed participants is calculated, and narrowing the circumstances in which other participants can be compensated following interventions. Further work on system strength issues is underway (see below).
Investigation into minimum system strength and inertia frameworks in the national electricity market
In April 2019 the AEMC started consultation on potential changes to the interventions framework in light of the growing number of directions being issued by AEMO to maintain system strength. While the intervention framework provides an important safety net, it is not without costs and is not intended to be used to provide ongoing maintenance of power system security. This investigation is considering the experience to date with the current frameworks for managing system strength and inertia, and whether any refinements are needed. A draft report is due in October 2019.
Review of the system black event in South Australia
The COAG Energy Council has asked the AEMC to review the factors which contributed to the "system black" event experienced in South Australia on 28 September 2016. The AEMC's review is a forward-looking assessment of what changes to the regulatory frameworks are needed to manage new risks faced by the power system. A discussion paper was published in August 2019 and a draft report is due in September 2019.
Review of the definition of unserved energy
In August 2019 the Reliability Panel completed a review of the definition of unserved energy used in evaluating whether the reliability standard has been met. The reliability standard, which guides how much electricity capacity is needed, is expressed in terms of unserved energy. The Panel clarified and simplified the definition of unserved energy used in post-event analysis of wholesale supply interruptions by examining what should be included or excluded from the calculation of unserved energy.
Introducing a mechanism for wholesale demand response
In July 2019 we made a draft determination to open up the wholesale electricity market so large consumers can be more easily paid for reducing their demand on the power system. The draft rule would allow non-retailers to offer demand response directly into the wholesale market.
Improving intervention compensation and settlement processes
In May 2019 the AEMC made a final rule to improve administrative processes related to compensation and settlement after AEMO intervenes in the market – for example, when directing a gas or diesel generator on to maintain system strength.
Annual market performance review
In April 2019 the Reliability Panel published its annual review of the reliability, security and safety of the national electricity market for the period July 2017 to June 2018. The review highlighted how Australia’s energy system is cleaner and greener, but the speed of structural change is putting growing pressure on power system security and reliability.
Introduction of a short term forward market
In April 2019 we published a consultation paper on a proposal from AEMO to introduce a short term forward market to enable participants to contract for electricity the week leading up to dispatch. This could help demand response providers and renewable generators manage risk and compete.
Speeding up implementation of priority transmission projects
In April 2019 we made a final rule to streamline the regulatory process for priority projects identified in AEMO's Integrated System Plan. The proposed projects are a new interconnector between South Australia and New South Wales and minor upgrades to the interconnectors joining QLD-NSW and VIC-NSW.
Review of the coordination of generation and transmission implementation – access and charging
A huge amount of generation will be built in the national electricity market in the coming years, taking the place of ageing coal-fired power. With more generators seeking to connect, the transmission network is expected to become increasingly congested. To help deliver the right amount of new transmission infrastructure to meet future needs, while keeping costs to consumers as low as possible, in March 2019 we started consultation on proposed reforms to:
- the way generators access and use the electricity transmission network
- charging arrangements which enable transmission businesses to recover the costs of building and maintaining transmission infrastructure, both within and between regions.
Enhancement to the Reliability and Emergency Reserve Trader mechanism
In May 2019 we published a final rule to boost the power system’s strategic reserve mechanism so it has the flexibility to effectively protect the reliability of the national electricity market at the lowest cost possible to consumers. The reliability and emergency reserve trader (RERT) is a safety net which enables the system operator, AEMO, to pay a premium for ‘out of market’ generation or demand response to be on standby when it forecasts supply shortages ahead.
Review into the coordination of generation and transmission investment.
In December 2018 we published a comprehensive reform package to improve the coordination of investment in electricity generation and transmission to help support the large amount of new generation connecting to the grid in the coming years and protect consumers from paying too much.
Review of the Frequency operating standard review
In December 2018 the Reliability Panel published a draft determination for its review of the frequency operating standard. On the advice of AEMO, the Panel maintained the existing settings in the frequency operating standard in relation to these issues, noting that the immediate priority is the joint AEMC-AEMO frequency control work plan.
Three year notice of closure rule
In November 2018 we made a final rule requiring generators to give at least three years’ notice before closing.
New technical performance standards for generators
In September 2018 we made significant changes to technical performance standards for generators seeking to connect to the national electricity grid, and the process for negotiating those standards. Under the final rule, a connecting generator's technical requirements are matched to local power system needs rather than a one-size-fits-all approach. This is key to keeping costs down for consumers.
New register of distributed energy resources
In September 2018 we made a new rule for AEMO to establish a register of distributed energy resources, including small-scale battery storage systems and rooftop solar. The register will give network businesses and AEMO visibility of where distributed energy resources are connected to help in planning and operating the power system as it transforms.
Updating values of customer reliability
In July 2018 we made a final rule making the AER responsible for calculating and updating values of customer reliability, which are used to develop reliability standards.
Frequency control frameworks review
In July 2018 we published a final report for our Frequency control frameworks review which recommended further changes to the market and regulatory frameworks to maintain effective frequency control as the generation mix changes. These recommendations are being progressed through our frequency control work plan is designing new, coordinated and lowest-cost ways to deliver frequency control services over the medium to longer term. We’re also working with AEMO on short-term changes to manage frequency deterioration, including encouraging generators to provide frequency control responses where feasible.
Reliability frameworks review
In July 2018 we published a final report for our Reliability frameworks review. This review considered 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. Recommendations are now being progressed through our reliability work plan.
Improving the transparency and consistency of medium term reliability forecasts
In May 2018 we published a new rule to improve the transparency and consistency of medium term reliability forecasts to signal whether or not electricity supply is projected to meet demand in the medium-term.
Review of the reliability standard and market price settings
In April 2018 the AEMC's Reliability Panel published its four-yearly 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. The Panel found that the current standard and balances the prices consumers pay for electricity against the cost to consumers of not having electricity there when it’s needed.
Extra tools to better forecast a ‘lack of reserve’
In December 2017 we made a new rule that gives AEMO better ways to signal when the market needs to increase electricity supply or reduce demand at short notice. The new rule provides AEMO with extra tools to better forecast a ‘lack of reserve’ – when the buffer of spare electricity capacity is getting too low. It also gives AEMO more flexibility in sending signals to the market to respond and restore the buffer, for example by making more generation available or by consumers agreeing to reduce their demand.
Package of new system security rules
In September 2017 we made final rules to:
- manage the rate of change of power system frequency – enabling better frequency control by making networks provide minimum levels of inertia and, with AEMO approval, enabling networks to contract with suppliers to provide inertia substitutes
- 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.
Emergency frequency control schemes
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 AEMO to regularly and transparently assess emerging risks caused by swapping out older synchronous generators, for non-synchronous generation technology like wind and solar.