The Australian Energy Market Commission (AEMC) has extended the timeframe on a package of seven rule change requests on system services. The extension on delivering draft determinations for the requests will enable us to better align this work with the Energy Security Board’s post-2025 market design project and give more consideration to the complex issues raised. 

The seven rule change processes each propose new ways to keep the power system secure and reliable as the generation mix changes.

The decision to extend the timeframes follows stakeholder feedback and prioritises more urgent system security issues while continuing to coordinate with ESB work. It also allows more time for key technical input from the Australian Energy Market Operator (AEMO) and gives stakeholders more flexibility to engage, given the volume of change underway in the energy sector.  

The new timeframe gives stakeholders further opportunity to provide input to both the ESB and AEMC processes given the complex and interrelated issues raised in the rule changes. 

These rule change requests both complement and are interdependent with, the issues being explored by the ESB in its ongoing post-2025 market design project. They offer opportunities to action the thinking and assessment done within the ESB work program. Aligning the work will mean the issues raised can be addressed cohesively and thorough consideration can be given to making sure any new system services arrangements are in the long-term interests of consumers.

AEMO’s recent Renewable Integration Study found that in the next five years the NEM will continue its significant transformation to world-leading levels of renewable generation, testing the boundaries of system security and current operational experience. 

With this in mind, and building on a range of security and reliability reforms already introduced during 2018 and 2019, we have been working closely with the ESB, AEMO and the Australian Energy Regulator to rethink the way system services are provided so that they support the evolving power system.

These rule change requests are the next step in that evolution. They are: 

  • Efficient management of system strength on the power system draft determination. This rule change request seeks to allow networks to be more proactive in the provision of system strength in the NEM. It will be the first action following the 15 October 2020 publication of our Final report for the Investigation into system strength frameworks in the NEM. This report will recommend how to evolve system strength frameworks going forward to support the changing power system. The timing of this project reflects stakeholder feedback that provision of system strength is an urgent issue and should be resolved as soon as possible. New publication date: 24 December 2020.
  • Synchronous services markets and a Capacity commitment mechanism for security and reliability draft determinations. These rule change requests propose new arrangements to procure system services, including reserves, and synchronous services such as inertia, voltage control and fault level (also known as system strength). The ESBs thinking and assessment undertaken as part of its Scheduling and ahead mechanisms and Essential system services market development initiatives will inform the approach to each of these rule changes. New publication date: 25 March 2021
  • Fast frequency response market draft determination. This rule change request proposes introducing new fast frequency control services to efficiently manage power system risks associated with reduced system inertia. The extended timeframe is needed so AEMO can develop supporting technical advice through its frequency work plan in stage 2 of its Renewable Integration Study. AEMO’s advice, expected in February 2021, will inform the Commission’s draft decision and any design choice in relation to fast frequency response services or markets. New publication date: 22 April 2021
  • Operating reserve market and Introduction of ramping services draft determinations. Between them, these rule change requests propose introducing a reserve and/or ramping service market to operate alongside the existing energy and frequency control markets. This is designed to help AEMO manage new and emerging operational challenges. The extension allows for AEMO to provide technical advice on the specific reserve service/s needed to keep the power system secure and reliable. This will inform both our assessment of the rule change requests and the ESB’s assessment of an operating reserve demand curve and mechanism as part of its Resource adequacy mechanisms and Essential system services market development initiatives. The ESB work will also be an important consideration in our rule change request process. New publication date: 24 June 2021
  • Primary frequency response (PFR) incentive arrangements draft determination. This rule change request is investigating the appropriateness of the existing incentives for the provision of PFR during normal operation and amending these arrangements as required to meet the power system’s future needs. The extended timeframe will allow AEMO to undertake further work to understand the operational and economic impacts of incentive- or marked-based provision of continuous primary frequency response. AEMO’s advice, expected in June 2021, will inform the AEMCs draft decision on whether and how new incentive arrangements could complement or replace the Mandatory primary frequency response that were introduced in June 2020. New publication date: 24 September 2021

The ESB expects to provide further direction on its post-2025 market design program in December 2020, with final advice due to be presented to energy ministers in mid-2021. 
More information about the ESB’s post-2025 market design program can be found here

Media: Kellie Bisset, Media and Content Manager, 0438 490 041; (02) 8296 7813