Rule Change: Completed
On 6 February 2018 the AEMC published a final rule determination (and no final rule) on the Inertia Ancillary Service Market rule change request submitted by AGL.
The Commission supports the development of competitive markets for the provision of system services for achieving the most efficient outcomes for consumers.
However, given the current power system operating conditions, the need to understand practical outcomes from new regulatory frameworks recently introduced, and to also assess outcomes from various programs of work underway by the Commission and AEMO, the Commission is not satisfied that the introduction of a market mechanism for inertia is appropriate at this time.
The Commission intends to continue its assessment of the appropriate design of an inertia market mechanism through the Frequency control frameworks review currently underway. Recommendations arising from this review will be published in mid-2018.
AGL's rule change request concerns the introduction of a NEM Inertia Ancillary Services Market as a response to the declining supply of inertia in the NEM.
On 27 June 2017, the AEMC published its final report on the System security market frameworks review. The report made a number of recommendations, both for immediate measures to address priority issues and a further program of work to develop robust market frameworks for the longer term.
Two of the recommendations contained in the final report relate to the provision of power system inertia:
- Place an obligation on TNSPs to provide minimum required levels of inertia, or alternative equivalent services, to allow the power system to be maintained in a secure operating state.
- Introduce a market-based mechanism to realise the market benefits that could be obtained through the provision of inertia above the minimum obligation on TNSPs.
On 19 September 2017 the AEMC made a final rule determination with respect to the rule change request received from the South Australian Government on Managing the rate of change of power system frequency. The final rule commences on 1 July 2018.
The final rule addresses the first recommendation by placing an obligation on TNSPs to make available the minimum level of inertia required to maintain secure operation of the power system by 1 July 2019.
The final rule does not provide a mechanism to realise the market benefits that could be obtained through the provision of additional inertia above the minimum required level.
However, the Commission considers that a market mechanism has the potential to complement and build on the certainty created through the TNSP obligation by providing the ability to continuously adjust the level of service provision in real time to maximise efficiency.
The Commission intends to continue its assessment of the appropriate design of an inertia market mechanism through the Frequency control frameworks review.View less