Rule Change: Open

Overview

Energy storage is becoming an increasingly important part of the national electricity market (NEM) and recent forecasts point to a greater role for storage in the future.
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Energy storage is becoming an increasingly important part of the national electricity market (NEM) and recent forecasts point to a greater role for storage in the future. This poses the question of how the framework should evolve to support the market as it transitions.

On 23 August 2019, the AEMC received a rule change request from the Australian Energy Market Operator (AEMO) to support the participation of storage systems in the NEM, including by defining storage technologies in the National Electricity Rules (NER). 
 
The rule change proposal seeks to address issues AEMO has identified with how grid scale batteries, aggregations of smaller batteries, and new business models with a mix of technologies behind the connection point (hybrid facilities), register and participate in the NEM. 

AEMO's rule change request proposes to define storage and hybrid facilities, so that the NER better recognise storage and connection points with bi-directional flows. 

In AEMO’s view, the rule change proposal would increase clarity and transparency for all stakeholders, remove barriers to entry for storage and hybrid facilities, and support the transition to an electricity system where more storage is needed to support variable renewable energy (VRE).

On 20 August 2020, the AEMC released a consultation paper to seek feedback on the significance of the issues identified by AEMO and whether these are likely to become worse in the future. This is to help us understand the importance and urgency of the issues, and whether they require a regulatory solution.

To the extent these issues are significant and do require changes to the NER to address them, we are also asking for feedback on whether it would be more appropriate to integrate storage and hybrid facilities into the framework by defining them and writing specific rules for them (as proposed by AEMO or by amending the existing rules to address the issues but without creating a new participant category.

We also note that this work interacts with the Energy Security Board’s (ESB) post-2025 market design program. In particular with the two-sided market workstream. We will need to consider this rule change request in the context of these broader reforms, which may require considering solutions other than one that defines storage assets and hybrid facilities in the NER. We are interested in feedback on the best way to proceed given the different approaches of the two sets of reforms.  

The AEMC will assess this rule change request over a longer period than the standard rule change process, given the detailed nature of rule change, its interaction with other reforms, and the difficulties stakeholders face with the current COVID-19 pandemic.

Submissions to the consultation paper will be open for a period of eight weeks and will close on 15 October 2020

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