Rule Change: Open
On 2 July 2020 the Australian Energy Market Commission (AEMC) initiated a rule change request from Infigen Energy seeking to introduce an operating reserve market in the national electricity market (NEM) to help respond to unexpected changes in supply and demand.
This rule change request is being considered as part of a wider Commission work program on system services looking at new ways to deliver system services as the power system evolves.
As the power system transitions we need new ways of delivering theses system services – such as frequency response, inertia, system strength and reserve services – to keep the technical characteristics of the power system within safe limits and to provide a secure and reliable service to consumers.
Rule change request from Infigen Energy Limited
On 19 March 2020, the AEMC received a rule change request from Infigen Energy 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.
Infigen argues this mechanism will help AEMO manage new and emerging challenges in the power system, being driven by increased variability and unpredictability in power system operation. These trends are making it more difficult to forecast, schedule and balance generation and load in the NEM.
The proposed operating reserve market comprises a dispatchable, raise-only service procured similar to contingency FCAS services in real-time and co-optimised with the other energy market services. The proposal suggests reserves could be procured 30 minutes ahead of time (with a 15-minute call time) to align with the requirement to return the system to a secure operating state within 30 minutes.
A consultation paper was published on 2 July 2020 seeking feedback on this, and other related rule change requests. Submissions from stakeholders should be provided to the AEMC by 13 August 2020.
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 and has published a single consultation paper seeking stakeholder feedback on the issues raised and the solutions proposed in each one.
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.
The AEMC has used the solutions proposed by each proponent to group the rule change requests into three timeframe-based "work streams" as a useful starting point for consultation. This will allow common issues to be considered more easily. These workstreams are:
Dispatch work stream which will consider proposed solutions where participants make short-term decisions between dispatch intervals to meet system needs, including:
- Fast frequency response market ancillary service (Infigen Energy)
- Primary frequency response incentive arrangements (AEMO)
Commitment work stream which will consider proposed solutions which involve committing or procuring the service ahead of the period for which there is a forecast need for it, including:
- Operating reserve market (Infigen Energy)
- Capacity commitment mechanism for system security and reliability services (Delta Electricity)
- Introduction of ramping services (Delta Electricity)
Investment work stream which will consider proposed solutions for the longer term timeframes for building the new assets needed to provide system services, including:
The TransGrid rule change request in the investment work stream will be progressed alongside AEMC's Investigation into system strength frameworks given the number of common issues also being explored in that review.
A further rule change request on Synchronous services markets (from Hydro Tasmania) will also be progressed alongside the AEMC's system strength investigation. While the proposal relates to dispatch timeframes, it has implications for the investment in assets for the provision of synchronous services, which aligns with the issues being considered in the system strength review and TransGrid rule change.
The AEMC has established these work streams, as a starting point for consultation. However, any new frameworks developed in response to the rule change requests will be focused on delivering the most efficient outcomes for consumers, having regard to outcomes across all time frames.