Market Review: Completed
On 1 August 2019 the Reliability Panel (Panel) published a final report into whether the current definition of unserved energy for the purposes of the reliability standard in the National Electricity Rules (NER) is still fit for purpose and, specifically, what events should be included or excluded from the calculation of unserved energy when evaluating whether the reliability standard has been met.
Scope of the review
In the NER, unserved energy is a measure of the amount of customer demand that cannot be supplied within a region due to a shortage of generation, demand-side participation or interconnector capacity.
The reliability standard, which guides how much capacity is needed in the national electricity market, is expressed in terms of unserved energy. Under the reliability standard, unserved energy must not be more than 0.002 per cent of the total energy demanded in a given year.
In this review, the Panel sought to clarify and simplify the definition of unserved energy used in calculating wholesale supply interruptions. The aim of the review was to recommend changes that provide clearer and more accurate information to the market about the performance of wholesale reliability in the NEM.
The scope of this review only extended to the transparency and clarity of the ex-post calculation of unserved energy. The Panel did not consider if the reliability standard itself, and how it is defined, was appropriate.
The final report concluded that the definition of unserved energy largely fit for purpose and in most instances, appropriately captures the right types of events in the calculation.
However, it also concluded that there was room for improvement with respect to information provision, clarity and transparency around how unserved energy is calculated.
As a result, the final report includes the following key recommendations:
- To promote transparency of the unserved energy calculation, AEMO should be required to provide more information on how it calculates unserved energy.
- To improve clarity of the unserved energy framework, the definition in the NER should be complemented with the introduction of a principle to guide AEMO when allocating incidents to unserved energy.
The Reliability Panel submitted the above recommendations, along with some additional minor changes aimed at improving clarity, to the AEMC in a rule change request. The rule change request is available below.
Background: consultation paper
On 4 April 2019 the Panel published a consultation paper seeking stakeholder feedback on four key potential issues:
- The definition of unserved energy in Chapter 10 of the NER may not make it clear enough that "unserved energy" for the purposes of the reliability standard is isolated to wholesale supply interruptions.
- The current contingency-based definition of unserved energy used to determine whether the reliability standard is met could be potentially complex to interpret in a constantly evolving power system.
- The NER, as currently drafted, do not exclude all power system security events from the definition of unserved energy.
- The Panel is also considering how to account for AEMO's reliability-related interventions, such as involuntary load shedding or the Reliability and Emergency Reserve Trader (RERT).
Submissions closed on 2 May 2019 and the Panel received 10 submissions. Feedback from these submissions was incorporated into the final report.