The Australian Energy Market Commission (AEMC) is considering an extension of the ‘interim reliability measure’ (IRM) put in place to support the reliability of the electricity system.
As the electricity market transitions toward net zero and more renewable energy sources connect to the system, reliability needs to be carefully managed to meet the needs of households, businesses and industry.
In 2020, at the advice of the Energy Security Board (ESB), Federal and State Energy Ministers agreed to the IRM of 0.0006 per cent expected ‘unserved energy’ to meet community expectations that electricity supply remains reliable during a 1 in 10 year summer.
The AEMC is required under the National Electricity Rules to review these interim arrangements, and in a draft report from the market body today, the AEMC has released a draft recommendation to extend the application of the IRM to the ‘retailer reliability obligation’ (RRO) to 1 July 2028.
The IRM acts as a trigger for two measures designed to provide more certainty about reliability, including the RRO, which encourages retailers to establish contracts with other parties to ensure they are adequately placed to fulfil energy demand.
The IRM is also a trigger for the ‘interim reliability reserve’ (IRR), an “out of market” capacity reserve that AEMO can procure in periods of high demand to further support the reliability of the power system.
With the transition expected to occur at a great scale and pace across at least the next five years, the Commission considers that maintaining the IRM as a risk management tool is in the interests of consumers.
Given that Energy Ministers recently agreed to an extension of the IRR by three years to 2028, the AEMC’s review focuses only on the IRM as the trigger for the RRO.
While the AEMC has published a draft recommendation to extend the tighter standard for the RRO by three years, the IRM is being considered only as an interim measure until the Reliability Panel has completed its more comprehensive assessment of how tail risk should best be managed in the longer term in the form of a new reliability standard.
The AEMC considers maintaining the IRM as a supplementary measure while the Reliability Panel reviews the form of the reliability standard provides greater certainty to the market to 1 July 2028.
The Commission will consider reviewing the need for the IRM beyond 1 July 2028, following the 2026 Reliability Standards and Settings Review.
Submissions in response to the draft report are being accepted until Thursday, 13 April 2023.
Media: Jessica Rich, 0459 918 964, firstname.lastname@example.org.
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