Rule Change: Open

Overview

This rule change request from Infigen Energy to introduce new ancillary service markets for fast frequency response (FFR) to efficiently manage power system risks associated with reduced system inertia.
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This rule change request from Infigen Energy to introduce new ancillary service markets for fast frequency response (FFR) to efficiently manage power system risks associated with reduced system inertia. 

Stable frequency is an important part of maintaining a secure power system. Frequency varies whenever electricity supply does not exactly match consumer demand and uncontrolled changes in frequency can cause blackouts.

The proposed markets for raise and lower FFR would operate similar to the existing market arrangements for FCAS.

On 2 July 2020, the AEMC initiated consultation on the rule change request.

Directions paper

On 17 December 2020, the Commission published a directions paper for two rule change requests that relate to the arrangements for fast frequency response and primary frequency response in the NEM.

Submissions are invited in response to the Directions paper by 4 February 2021.

Further information on the Primary frequency response incentive arrangements rule change is available at the project page

As the power system transitions to a lower emissions' generation mix, there are emerging challenges for power system operation. One element of this technological change is the projected decrease in power system inertia. 

The projected decline in system inertia may lead to significant cost increases for ancillary services used to control system frequency. The provision of faster frequency response services is expected to mitigate the size of future cost increases for market ancillary services compared to a ‘do nothing’ approach. 

The high-level market options for the provision of contingency FFR services are: 

  • Option 1 – new market ancillary services to procure FFR FCAS
  • Option 2 – reconfiguration of the FCAS arrangements to procure FFR through the existing service classifications.

The Commission is interested in stakeholder views on these high-level FFR options along with a number of other policy considerations discussed in the directions paper.

The Commission intends to publish a draft determination for this rule change by 22 April 2021. The draft determination will be informed by stakeholder submissions, AEMO technical advice, and the Commission's analysis with respect to the long-term interests of electricity consumers.

Extension of time

On 24 September 2020, the Commission extended the timeframe to make a draft determination until 22 April 2021. The extended timeframe is needed so AEMO can develop supporting technical advice through its frequency work plan in stage 2 of its Renewable Integration Study. AEMO’s advice, expected in February 2021, will inform the Commission’s draft decision and any design choice in relation to fast frequency response services or markets

Frequency control work plan

This rule change relates to our Frequency control work plan which sets out a series of actions that AEMO, the AEMC and the AER are undertaking to review and reform the frequency control frameworks in the national electricity market. 

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: 

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Documentation