Rule Change: Open
The Australian Energy Market Commission (AEMC) has made a draft determination not to implement an operating reserve market, following analysis of the issues, stakeholder feedback to the directions paper and recent reforms.
We have instead made a draft rule that would improve existing arrangements and increase the transparency of energy availability across the national electricity market (NEM) to help participants respond to unexpected changes in supply and demand.
The draft rule would enable the publication of information on energy availability in operational timeframes
Participants in the market make their own commitments to keep capacity in reserve, based on price signals and the risks and operational costs associated with running their plant. To date, the market arrangements in place price the need for energy and frequency control, but do not explicitly price reserves.
An alternative approach to meeting reserve needs is to explicitly value their provision through an operating reserve market. This would separate the provision of reserves from energy and frequency control ancillary services (FCAS) markets.
The AEMC has considered the merits of this approach and is proposing not to implement an operating reserve market. While an operating reserve market could provide greater visibility of market participants’ reserve decisions helping to manage risks, the Commission considers that it would not offer any material performance improvements relative to the current arrangements, and would introduce significant additional costs for the market.
In the absence of an operating reserve market, the Commission is making a draft rule that would further support the current arrangements to value reserves during the transition. The draft rule would publish information on the energy availability in the operational timeframe, including:
- State of charge: the energy availability of batteries (i.e. state of charge in MWh) would be published close to real-time, aggregated by region, and the following trading day by dispatchable unit identifier DUID (to align with existing post-trading day publications).
- Daily energy constraints: the combined energy constraints of other scheduled plant types (hydro, gas and coal) would be aggregated by region and published daily (at the start of each trading day).
- Maximum storage capacity: storage participants would need to provide their maximum storage capacity (MWh) to the Australian Energy Market Operator (AEMO) in their bid and offer validation data.
Stakeholder submissions to the draft determination close 8 February 2024.
New project name
Following the Commission’s proposal in the directions paper not to implement an Operating reserve market and stakeholder feedback to the directions paper, the Commission has renamed this project from ‘Operating reserve market’ to ‘Enhancing reserve information’. This better encapsulates the direction of the rule change as outlined in the directions paper.
Rule change request
On 19 March 2020, the AEMC received a rule change request from Iberdrola Australia Limited which seeks to amend the National Electricity Rules to introduce a dynamic operating reserve market to operate alongside the existing NEM spot and frequency control ancillary services (FCAS) markets.
On 4 June 2020, the AEMC received a rule change request from Delta Electricity which seeks to amend the National Electricity Rules to introduce 30-minute raise and lower ramping services using the existing FCAS market design framework.
The Iberdrola Australia and Delta Electricity rule change requests were consolidated on 5 October 2023, pursuant to section 93 of the NEL, under the name “Enhancing reserve information” and using project code ERC0295. The AEMC decided to consolidate the rule change requests because both requests relate to considering arrangements for forecast uncertainty and variability given the expansion of variable renewable energy. The consolidation will also simplify the engagement process for stakeholders.
Key dates for this rule change
- Rule change request received (ERC0295) – 19 March 2020
- Rule change request received (ERC0307) – 4 June 2020
- Initiation of Delta Electricity and Iberdrola Australia Limited rule changes – consultation paper published (for six system service rule changes) – 2 July 2020
o Submissions to the consultation paper closed – 13 August 2020
- Directions paper published for two rule change requests – 5 January 2021
o Submissions to the directions paper closed – 11 February 2021
- AEMO technical advice received – 11 November 2022
- Second directions paper published – 3 August 2023
- Draft determination published – 21 December 2023
o First s107 notice to extend draft determination – 24 June 2021
o Second s107 notice to extend draft determination – 9 December 2021
o Third s107 granted to extend draft determination – 26 June 2023
o Fourth s107 granted to extend draft determination – 5 October 2023
o Fifth s107 granted to extend draft determination – 7 December 2023
- Final determination – 21 March 2024