Rule Change: Open
On 2 July 2020 the Australian Energy Market Commission (AEMC) initiated a rule change request from Delta Electricity to introduce a capacity commitment mechanism to provide access to operational reserve and other system security or reliability services.
This rule change request is being considered as part of a wider Commission work program on system services looking at new ways to deliver system services as the power system evolves.
As the power system transitions, we need new ways of delivering theses system services – such as frequency response, inertia, system strength and reserve services – to keep the technical characteristics of the power system within safe limits and to provide a secure and reliable service to consumers.
Rule change request from Delta Electricity
On 4 June 2020, the AEMC received a rule change request from Delta Electricity which seeks to amend the National Electricity Rules to introduce an ex-ante, day ahead capacity commitment mechanism and payment so that generators or demand response providers remain available to offer operational reserve and any other system security or reliability services that the Australian Energy Market Operator (AEMO) may require to meet its security and reliability objectives.
Delta Electricity argues that non-peaking dispatchable plant, which is necessary for meeting the energy and system services needs at this time, may decommit in response to increasing periods of low prices. Delta Electricity argues this will lead to the national electricity market (NEM) more frequently experiencing shortfalls in system security and reliability services and an increasing reliance on AEMO directions to meet power system needs.
The proposed capacity commitment mechanism would provide a payment to non-peaking dispatchable generators to remain online at their minimum safe operating level (MSOL) should they be needed for system security or reliability purposes based on AEMO forecasts during the pre-dispatch process.
A consultation paper was published on 2 July 2020 seeking feedback on this, and other related rule change requests by 13 August 2020.
On 24 September 2020, the Commission extended the timeframe to make a draft determination until 25 March 2021. This extension will enable us to better align the work with the ESB’s market design project and prioritise more urgent system security issues. The ESBs thinking and assessment undertaken as part of its Scheduling and ahead mechanisms and Essential system services market development initiatives will inform the approach to this rule change.
Other relevant system services rule change processes underway
The AEMC has seven rule change requests relating to the provision of system services that it is currently assessing. Collectively, the AEMC refers to these rule requests as the “system services” rule change requests.
These system services rule change requests complement and are interdependent with the work of the Energy Security Board (ESB) to develop advice on a long-term, fit-for-purpose market framework to support reliability that could apply from the mid-2020's. The AEMC is working closely with the ESB and the other market bodies as it progresses these rule change requests.
We are considering the interactions between issues raised in the different rule changes so that any new frameworks developed in response to the rule change requests will be focused on delivering the most efficient outcomes for consumers.
The AEMC will be making draft determinations for each of the rule change requests over the coming year prioritising more urgent system security issues while continuing to coordinate with ESB work and seek key technical input from the Australian Energy Market Operator (AEMO).
More information on each of the system services rule changes can be found at the links below:
- Fast frequency response market ancillary service (Infigen Energy)
- Primary frequency response incentive arrangements (AEMO)
- Operating reserve market (Infigen Energy)
- Capacity commitment mechanism for system security and reliability services (Delta Electricity)
- Introduction of ramping services (Delta Electricity)
- Efficient management of system strength on the power system (TransGrid)
- Synchronous services markets (Hydro Tasmania)