Market Review: Open
The Reliability Panel (the Panel) is reviewing the form of the reliability standard to determine if another form better reflects changing reliability risk as the national electricity market (NEM) transitions to net zero.
The nature of reliability risk is changing
The NEM is transforming from a centralised, predominately thermal power system to a more decentralised and complex one, characterised by high levels of variable renewable energy (VRE) and storage. This transition has several implications for the nature of reliability risk in the NEM.
Increasing reliance on variable renewable energy introduces new risks associated with weather-dependent output. Coincident outages and dark doldrum or 'dunkelflaute' periods of low renewables output due to low or no sunshine and/or wind create a risk of 'tail' events of potentially prolonged unserved energy (USE) outcomes. In these situations, insufficient available supply with reduced wind and solar output and limited storage capacity results in supply interruptions for consumers.
The current form of the reliability standard may need to change
In the 2022 Reliability Standards and Settings Review, the Panel found that the current form of the standard in the NEM may need to change to better reflect the changes in reliability risk that would have impacts for consumers.
The new risk profile from an increasing dependence on high VRE sources of power changes the shape of the distribution of reliability events and may cause a shift towards an extended 'tail risk USE events'. Tail risk refers to the risk of large, low probability outcomes reflected in the ‘tail’ of the USE probability distribution.
This review of the form of the reliability standard seeks to determine how the form of the standard can better capture some of the reliability risks. This will be achieved by assessing the ability of the current standard, and numerous candidate alternatives, to adequately describe the reliability risk and be operationalised to efficiently encourage investment and reliability risk management.
We are seeking stakeholder feedback on the Panel's approach to the review of the form of the standard including the:
methodology for characterising changes to reliability risk,
proposed modelling approach and
assessment of the suitability of candidate forms of the standard.
Submissions on the Issues Paper are due on 4 May 2023. Electronic submissions must be lodged online through the AEMC’s website, www.aemc.gov.au, using the link entitled 'lodge a submission' and reference code 'REL0086'.