Market Review: Completed
Overview
On 27 June 2024, the Reliability Panel (the Panel) released a Final Report outlining that the current form of the reliability standard and the administered price cap (APC) remain fit for purpose as the national electricity market (NEM) transitions.
The Panel’s final recommendations
The Panel’s final recommendation is to maintain the current form of the reliability standard and the current form of the APC. The Panel is also recommending process improvements to enhance the operation and implementation of the standard.
In developing these recommendations, the Panel has undertaken extensive modelling and analysis to characterise reliability risk in a high-variable renewable energy (VRE) NEM. The results have shown that while the characteristics of the reliability risk are expected to change in several ways, the current form of the reliability standard still adequately captures the vast majority of unserved energy (USE) events that will likely arise in the NEM. Therefore, it remains an effective way to measure reliability risk and weigh it against the costs of increased reliability.
The Panel also considers the current form of the APC continues to be fit for purpose based on stakeholder feedback and the Panel’s analysis of the issue. The Panel, however, proposes to closely review the level of the APC as part of the Panel’s four-yearly Reliability Settings and Standard Review (RSSR) to ensure it is set at an appropriate level.
Background
On 30 March 2023, the Australian Energy Market Commission tasked the Panel with reviewing the form of the reliability standard to determine if it adequately reflects the changing reliability risk profile or whether alternatives need to be considered.
The Panel was also tasked with reviewing the potential need for a new form of the APC to ensure it remains fit for purpose in the long term.
The Directions Paper published on 30 November 2023 documented both the methodology and results of the Panel’s modelling.
Building on stakeholder feedback, the Panel carried out further work for the Draft Report to gather additional information on the changing characteristics and to provide evidence on whether a change to the form of the reliability standard and APC is warranted.
Stakeholder feedback on the draft recommendations was overwhelmingly supportive. The final report reflects this feedback.