Merryn York

Acting Chair

 

As Australians flick on the air conditioner and run the pool pump for longer to seek refuge from another summer scorcher, we’re reminded again of why a secure and affordable electricity supply matters so much to people across the nation.

Security of the power system remains the most pressing challenge for the sector. The number of times the Australian Energy Market Operator (AEMO) has needed to intervene in the market to secure the system  ̶̶  for instance, by compelling synchronous generators to operate or large users to throttle back demand  ̶̶  has reached record levels.

A secure system is one that has the right voltage and a stable frequency that doesn’t deviate too far from 50 hertz (Hz), and can recover rapidly when there is a short-term shock to the system, like an equipment failure or storm damage on the grid.  

Weather-reliant and small scale “behind the meter” generation sources have been growing exponentially but their physical characteristics are different to traditional synchronous generators and they interact differently with the power system. Traditional coal, gas and hydro generators provided system stability services for free  ̶̶  their spinning turbines providing high levels of system strength and inertia. The simultaneous exit of ageing thermal power stations, at a time of falling wholesale prices, is all combining to put more pressure on system security.

This is part of the bigger story of the extraordinary transformation of Australia’s power system. It’s happening at an unrivalled pace. There is no halting this.  That’s why we are focussed on how ‘essential system services’ can be provided in the future to ensure that this rapidly-transforming system is also stable and secure.

Our work to more proactively provide system strength will support a stable system and the connection of new energy sources more easily. Another draft rule sets minimum technical standards for new and replacement micro embedded generators, largely rooftop solar systems, and is aimed at ensuring they stay connected amid voltage disturbances. We are also working on a rule to ensure AEMO has more accurate information on the output of solar and wind farms.

But there is still more to do.

Working collaboratively with the the Energy Security Board (ESB), AEMO and the Australian Energy Regulator (AER), we are doing a lot more thinking ahead on long-term solutions that can keep up with changing technologies. We’re sharpening our focus on more proactively supplying the services we need for the future power system. The delivery on this is non-stop and we keep consumers at the front of mind. On the customer front, we are today releasing a draft rule aimed at improving energy bills for consumers. This is in response to a rule change requested by Minister for Energy and Emissions Reduction Angus Taylor.

The reforms we are advancing in conjunction with our involvement in the Energy Security Board’s post 2025 work are about developing new and evolving existing tools and markets to make sure the system has the services it needs when it needs them. Large energy users have pointed to concerns about the costs of interventions that are increasing. Important reforms are aimed at reducing AEMO’s challenges in managing the power system.

We’ve heard stakeholders who say that being able to obtain system services is a priority. To this end we have received and are progressing a number of rule changes which will allow this vital work to be progressed more quickly.

Today we release a series of rule change documents which are aligned with the ESB’s work to build a stronger power system that can keep the lights on as generation technologies change.

One of these is aimed at creating incentives to unlock investment in services such as fast frequency response.  

A separate paper outlines a number of options to potentially better integrate storage systems, such as batteries, into the national electricity market (NEM). Storage is forecast to have an increased role in the future. The impending move to five-minute settlement will provide a better signal for technologies like batteries that can respond quickly.  We are wanting to engage further on the options for how storage and hybrid facilities can better participate in the NEM.

Also today, we have initiated two rule change requests that flow from our review into the systemic issues that contributed to the September 2016 black system event in South Australia, which made recommendations to enhance the resilience in the power system. Both rule change requests have come from federal and state energy ministers. One of these is looking at further clarifying how the National Electricity Rules apply during market suspension. The other is considering how to make the system more resilient to “indistinct” events that are emerging as the technology mix transitions and weather events become more frequent and severe. The proposed rule change would enable AEMO to take various actions to protect the system, in turn safeguarding consumers. These are important areas of our work to improve system security and resilience.

Our directions paper on frequency change outlines options that aim to control power system frequency to help keep the lights on, while looking at how to reward investment and innovation, for example in technologies that could respond to frequency variations within seconds.

We also continue working on other practical solutions to deal with the challenges of a new-look power system. As ESB Chair Kerry Schott AO noted earlier this year, ensuring the NEM is fit for purpose is not about one “big bang” reform. We have been listening and will continue to do so as we address the many challenges facing the sector. While we focus on priorities like the provision of essential system services, with the ESB we are looking at this in a coordinated manner that also addresses resource adequacy, the opportunity for consumer participation in the market, and how to provide access to the grid at the lowest overall cost.

 

Media: Kellie Bisset, Media and Content Manager, 0438 490 041