The Australian Energy Market Commission (AEMC) has made a final determination and final rule to change the way the system strength quantity (SSQ) component of the system strength charge is calculated to give market participants and investors greater clarity and confidence in the framework.
The system strength framework gives connecting generators a choice between two options to reduce their system strength impact on the power system.

These participants can either pay the charge for centrally provided system strength services, or they can take proactive measures to self-remediate by installing additional equipment, like a synchronous condenser or grid-forming battery.

Having this choice encourages investors to make efficient decisions when connecting new plant or making alterations to existing plant.

To make efficient decisions about whether to remediate or pay the charge, connection applicants need the options to be broadly equivalent – and currently, they are not.

The final rule makes the two options broadly equivalent as originally intended and makes arrangements for the SSQ calculation to evolve in line with our knowledge of system strength, the technologies that provide it, and the policies that govern its provision.

Specifically the new rule: 

• shifts responsibility for determining the SSQ calculation from the National Electricity Rules (NER) to the Australian Energy Market Operator (AEMO), integrating it into the system strength impact assessment guidelines (SSIAG)
• introduces new policy principles in the NER to guide AEMO in setting the SSQ methodology, offering clarity to stakeholders.
• clarifies the process of moving from an indicative to a final SSQ 
• triggers an update to AEMO's SSIAG paving the way for the new measures to take effect on 1 July 2024. 
  AEMO intends to commence consultation to update the SSIAG in the coming weeks.

The final rule includes transitional provisions that provide details on how applicants at different stages of the connections process will transition to the new arrangements from 1 July 2024 when the new methodology takes effect.

This final rule forms part of the AEMC’s broader work monitoring and evolving system strength framework as it is implemented.

For more information and contact details visit the project page here.

Media enquiries: Jessica Rich | 0459 918 964 | media@aemc.gov.au