Market bodies’ examination of South Australia’s 2016 system black event – next step

16 February 2017

Ministers on the Council of Australian Governments Energy Council have asked the Australian Energy Market Commission (AEMC) to undertake the final stage of work by the market bodies into South Australia’s system black event on 28 September 2016.

The AEMC review will build on work already underway by the market operator, AEMO, into technical matters in relation to the event; as well as the Australian Energy Regulator’s compliance review.

The AEMC review will focus on systemic issues that caused the system black or affected the response. It will look at possible changes to market rules and legislation flowing from analysis of those systemic issues.

The federal, state and territory energy ministers have provided terms of reference, released today.

The AEMC is to provide a report to Ministers on recommended actions or amendments to the regulatory frameworks that should be taken to address any such systemic issues.

The AEMC report is due to be provided within six months of the completion of both AEMO’s investigation report and the AER’s compliance report.

The Commission received terms of reference for the review in early January 2017 and provided advice to the Council on how it proposes to conduct the review on 31 January 2017. The AEMC has today published both this advice and the terms of reference.

This work is separate to the AEMC’s review of power system security which started in July 2016 before South Australia’s system black event happened.

The AEMC’s system security market frameworks review is addressing fundamental questions raised by the technological revolution underway in the national power system which has seen the rapid penetration of new generation technologies such as wind farms and rooftop solar. In the past, these technologies accounted for only a small fraction of total electricity supply. Now they are a critical part of our power system, and their significance is continuing to grow.

As these technologies make up an increasing proportion of Australia’s electricity needs, new approaches to maintaining power system security will be required. To support the continuing transformation of the power system the AEMC is reviewing the regulatory frameworks that affect system security.

The AEMC has published an interim report on the System Security Market Frameworks Review which sets out some of the key aspects of system security being considered and some of the preliminary findings of the Commission. A directions paper will be published in March 2017 indicating the Commission’s preferred approach.

The review deals with a range of complex inter-related issues for which technical solutions have not yet been fully developed, both internationally as well as in Australia.

New market frameworks need careful design to limit costs over the long term while enabling innovation and sufficient investment for new service provision to be effective in maintaining security as the market transitions.

For information:

Suzanne Falvi, Senior Director 02 8296 7883

Media contact: AEMC Communication Director, Prudence Anderson 0404 821 935 or (02) 8296 7817