Proposal for changes to medium term reliability forecasting: additional information

The AEMC is currently seeking feedback on a draft determination enabling AEMO to provide earlier alerts to industry about possible shortfalls in electricity supply up to three years ahead. This would give generators and demand response providers more opportunity to respond and fill a projected gap in power supply at a lower cost to consumers.

The rule change proponent, ERM Power, has made an early submission to the draft determination proposing:

a new change that would require generators to submit an explanation when a generating unit is unavailable
alternative approaches to two of the proposed changes from the rule change request that the AEMC did not make in the draft determination.

Stakeholders are encouraged to consider these issues when making a submission to the draft determination which is due by 9 January 2020.

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

BACKGROUND

The medium-term projected assessment of system adequacy (MT PASA) is a forecasting exercise to assess whether or not electricity supply is expected to meet demand across a two year horizon.

Under the National Electricity Rules, AEMO is required to produce a range of forecasts as part of the MT PASA, including projected demand for electricity and the availability of generators. On the supply side, the forecasts are based on information provided by generators including on their planned outages. They also take into account unplanned outages, such as a generation unit becoming unavailable due to a technical issue.

AEMO’s forecasts provide a signal to the market on whether the reliability standard is expected to be met in the medium term. This gives market participants the opportunity to respond by supplying the amount of generation and demand response that is expected by the reliability standard.

The AEMC’s draft determination proposes a range of changes to the MT PASA to improve the transparency and accuracy of information about potential electricity shortfalls. Key features include requiring AEMO to:

publish information about planned maintenance for individual generation units (currently only aggregated information about generator availability is published)
provide greater clarity on how future generation is included in the forecast, as well as how generation availability impacts forecasts under a range of scenarios
use the same format when publishing forecast and actual demand so the data can be easily compared
requiring the data that participants provide into the MT PASA to be based on participants ‘current intentions and best estimates’.

The draft determination also proposes extending the forecast period from two to three years. This would give the market more time to respond, for example by adjusting generator maintenance schedules, investing in new plant and equipment, or developing demand response programs.

It would also align the forecasting timeframe with the retailer reliability obligation (RRO). The RRO requires retailers to contract with generators to cover a projected shortfall in electricity supply. It can be triggered up to three years ahead of a projected shortfall. By extending the outlook of the MT PASA to three years, retailers and generators would have better information to agree contracts for electricity supply under the RRO. This would help reduce the likelihood of energy shortfalls triggered through the RRO eventuating.

In addition, the MT PASA is fundamental to AEMO's procurement of emergency reserves under the Reliability and Emergency Reserve Trader (RERT). AEMO uses the MT PASA to help assess the need for and amount of emergency reserves to buy under the RERT ahead of an expected shortfall. By increasing the accuracy and transparency of the MT PASA, AEMO should be able to procure RERT reserves more efficiently, helping reduce costs passed through to consumers.

This work is part of AEMC’s system security and reliability action plan.