Rule Change: Open

Overview

On 27 April 2021, the Commission extended the period of time for making the draft determination to 29 July 2021 under section 107 of the NEL. 
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On 27 April 2021, the Commission extended the period of time for making the draft determination to 29 July 2021 under section 107 of the NEL. 

The AEMC and AEMO have been working closely together to date on the complex issues that the rule change is seeking to address. However, AEMO has recently requested more time to consider potential impacts from issues which it had previously not incorporated into its considerations, particularly on its operating systems and procedures. 

Because of the complexity of this rule change, and the link to the ESB’s post 2025 work, it is important to continue the collaborative approach. Therefore, the Commission agreed to provide more time to allow AEMO to further consider how it can efficiently implement the proposed policies.

The extension of up to 3 months will allow the Commission to consider and include these issues in the draft determination for broader consultation and stakeholder feedback. In the event AEMO can consider the potential impacts earlier than anticipated, the Commission will endeavour to release the draft determination before 29 July 201. 

Next Steps

The draft determination and draft rule will be published by 29 July 2021, and the Commission will invite stakeholder feedback then. 

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. 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 helped us understand the importance and urgency of the issues, and whether they required a regulatory solution.

To the extent these issues are significant and do require changes to the NER to address them, we also asked 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.

Submissions to the consultation paper closed on 15 October 2020 and we received 38 submissions. 

On 3 December 2020 the Commission extended the period of time for making the draft determination to 29 April 2021 under section 107 of the NEL. This allowed the AEMC to publish an options paper on 17 December 2020 seeking further stakeholder feedback on both the participation and non-energy costs recovery frameworks. 

Alongside the ESB’s two-sided markets considerations, the options paper provided the opportunity to receive stakeholder feedback on changes to how storage proponents register and participate in the NEM. The Commission also sought feedback on the existing non-energy cost recovery framework, currently reliant on the assumption of one directional energy flow. Specifically, this rule change provided a way to test with stakeholders a new approach to recovering non-energy costs based on separately measured consumed or sent out energy, rather than the registration category of a participant. 

Submissions to the options paper closed on 11 February 2021.

We also note that this work interacts with the Energy Security Board’s (ESB) post-2025 market design program. In particular the work interacts with the two-sided market workstream. We are considering 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.

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