Today the AEMC published a directions paper describing a revised approach to new incentive arrangements that encourage generation and load to help control power system frequency.
 
Power system frequency must be maintained within a narrow range around 50Hz, which is achieved by dynamically balancing electricity generation and consumption at all times. A range of mechanisms enables that balance, including primary frequency response (PFR).
 
A draft rule determination, published in September 2021, sought to refine the frequency performance payments process. During the consultation, stakeholders asked for further development of the process and a detailed analysis of the expected financial impacts.
 
Today’s directions paper incorporates these requests, showing how the proposed arrangements would support the provision of primary frequency response in the future.  
 
Commission now seeks stakeholder input on the revised process to inform its determination of a final rule. Submissions to this directions close on 16 June 2022. 
 
The Commission acknowledges other feedback to the draft determination, where some stakeholders expressed concern at the proposed confirmation of ‘mandatory PFR’ as part of the enduring PFR arrangements in the NEM. This element of the draft rule is not the focus of this directions paper, however it will be subject to further consideration and a response will be included in the final determination.  
 
This project contributes to the Energy Security Board’s recommendations and complements other reforms currently being implemented for system strength and fast frequency response. Find further information and contact details on the project page for Primary frequency response incentive arrangements.