Victoria Mollard

Executive General Manager, Security and Reliability

The integration of new energy sources into Australia’s generation mix means we need to find innovative new ways of keeping the system stable. Getting this right will ease cost-of-living pressures, secure the future of new technologies in the system and create a more streamlined environment for generators, network businesses and retailers.  

System security is the most critical issue in the national electricity market as new technologies have such different physical characteristics to the thermal generation being displaced. We have already made a number of reforms this year to help strengthen the system. More recently, to cite just a few, these have included: the work to make sure that the Australian Energy Market Operator (AEMO) can easily procure services to promptly restart the system after a “system black” event as the generation mix changes; our report to evolve the frameworks for managing system strength; and our rules to ease the red tape involved where AEMO needs to intervene in the market.

This work is foundational and we are building on it further as we pursue our reform agenda, including through the Energy Security Board's post 2025 market redesign. As noted in the ESB’s post 2025 consultation paper released in September, where there are no markets to procure essential services that stabilise the system, this can leave AEMO needing to intervene in the market. In turn, this can render investment signals inefficient and lead to higher costs for consumers. Stakeholders have said we need to put a value on missing system services and do something about procuring them. Some stakeholders argued this would drive a stronger business case for investors by making revenue streams more visible, while others argued their operational decisions would be supported.

We’ve heard the message that some of this demands action before 2025. Our rule change process provides an avenue to move promptly on this, particularly on those issues that are more urgent in nature.

Stakeholder feedback to the ESB has backed the idea of setting up markets for essential system services, where that is workable. This won’t always be possible. Where it’s not, the focus is on providing a structured approach to procurement.

We have unveiled details of our thinking in several papers released today. These papers seek your feedback on options aimed at finding new ways to deliver system security.

We have released a paper on reforming the way frequency is controlled. This paper details high-level policy pathways for a new market for fast frequency response and enhanced arrangements for primary frequency control. We are considering two options for fast frequency response services that would help manage the risks associated with reduced inertia as the generation mix changes. For primary frequency control during normal operation, we are considering future evolutions of the mandatory arrangements we introduced in March to better incentivise the provision of primary frequency response.

Our work on system services is complementary to and interdependent with the work of the ESB and the direction of that work. We will be continuing to look at new ways of providing system services such as inertia, voltage control and operating reserves as we progress our work on multiple rule change requests.

We have also today started seeking feedback on two rule change requests to adopt recommendations from our final report from the South Australian black system event review. Our consultation papers on proposed rule changes to make the system more resilient to “indistinct” events and to better allow AEMO to prioritise core system security during a market suspension. In other work released today, we have finalised a rule change that is part of our wider work to update the framework for when AEMO intervenes in the market. This rule change streamlines the way compensation is arranged when certain services are directed, such as when batteries are told to maintain a specific charge.

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