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. Submissions from stakeholders should be provided to the AEMC by 13 August 2020.
Other relevant system services rule change processes underway
The AEMC has seven rule change requests relating to the provision of system services.
Collectively, the AEMC refers to these rule requests as the “system services” rule change requests and has published a single consultation paper seeking stakeholder feedback on the issues raised and the solutions proposed in each one.
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.
The AEMC has used the solutions proposed by each proponent to group the rule change requests into three timeframe-based "work streams" as a useful starting point for consultation. This will allow common issues to be considered more easily.
These workstreams are:
Dispatch work stream which will consider proposed solutions where participants make short-term decisions between dispatch intervals to meet system needs, including:
- Fast frequency response market ancillary service (Infigen Energy)
- Primary frequency response incentive arrangements (AEMO)
Commitment work stream which will consider proposed solutions which involve committing or procuring the service ahead of the period for which there is a forecast need for it, including:
- Operating reserve market (Infigen Energy)
- Capacity commitment mechanism for system security and reliability services (Delta Electricity)
- Introduction of ramping services (Delta Electricity)
Investment work stream which will consider proposed solutions for the longer term timeframes for building the new assets needed to provide system services, including:
The TransGrid rule change request in the investment work stream will be progressed alongside AEMC's Investigation into system strength frameworks given the number of common issues also being explored in that review.
A further rule change request on Synchronous services markets (from Hydro Tasmania) will also be progressed alongside the AEMC's system strength investigation. While the proposal relates to dispatch timeframes, it has implications for the investment in assets for the provision of synchronous services, which aligns with the issues being considered in the system strength review and TransGrid rule change.
The AEMC has established these work streams, as a starting point for consultation. However, any new frameworks developed in response to the rule change requests will be focused on delivering the most efficient outcomes for consumers, having regard to outcomes across all time frames.