Market Reviews: Open

Reliability Frameworks Review

Reference:
EPR0060
Reviewed by:
AEMC
Initiated by:
AEMC
Date initiated:
11-Jul-2017
Project Leader:
Sarah-Jane Derby
Overview

The AEMC has published an issues paper for its review into the market and regulatory frameworks that underpin reliability in the National Electricity Market (NEM).

The AEMC has published an issues paper for its review into the market and regulatory frameworks that underpin reliability in the National Electricity Market (NEM).

Issues paper

This issues paper explains the features of the existing reliability framework, in particular, that it is a market-based framework, but with a series of intervention mechanisms.

The paper also discusses a range of potential issues associated with the current framework, and seeks stakeholder feedback on these matters.

The Review, and so the Issues Paper, also incorporates and discusses a number of recommendations from the Finkel Panel that are within the scope of the Review, such as:

  • the recommendation of a Generator Reliability Obligation
  • the need for a strategic reserve to act as a safety net in exceptional circumstances or replacement to the existing reliability and emergency reserve trader mechanism
  • the suitability of a ‘day-ahead’ market
  • a mechanism that facilitates efficient demand response in the wholesale  energy market.

Submissions are due by 19 September 2017.

Background

Over the past year, load shedding events on low reserve days, pre-emptive action and announcements from jurisdictional governments, as well as recommendations made by the Finkel Panel in the Independent Review into the Future Security of the National Electricity Market have led to a greater focus on reliability in the NEM.

At the same time, the NEM is changing at a rapid pace on both the demand and the supply side. The AEMC considers that it is timely to assess whether the current market and regulatory reliability frameworks are appropriate and has self-initiated this review under Section 45 of the National Electricity Law.

The Commission published its terms of reference on 11 July 2017. This review focusses on the efficient investment, retirement and operational decisions made by market participants for reliability purposes.

Reference Group, Technical Working Group and other collaboration

The Commission has also set up a Reference Group to provide high-level input into the review and is also setting up a Technical Working Group to provide technical advice.

The Commission notes that AEMO is currently working on a number of pieces of work that relate to this review. These pieces of advice will further inform the assessment of the issues, as well as potential solutions, and we will work closely with AEMO on this.

Next steps

The AEMC intends to provide a progress report to the COAG Energy Council by the end of the year.

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Documentation