Rule Change: Completed
Overview
On 19 December 2024, the Australian Energy Market Commission (AEMC) published a final determination and a more preferable final rule to improve the Australian Energy Market Operator’s (AEMO’s) consideration of demand side factors in the Integrated System Plan (ISP).
The final rule:
- requires AEMO to publish a demand-side factors statement in the ISP to provide a transparent and consolidated explanation of the expected development of the demand-side of the market and the distribution network
- requires AEMO to publish Information Guidelines to drive a more consistent approach to the collection of relevant information
- places an obligation on distribution network service providers (DNSPs) to provide relevant information to AEMO
- requires AEMO to publish the information provided by DNSPs in the ISP database.
The final rule will support a more robust ISP and more informed decision making by policymakers and stakeholders. It will improve AEMO’s analysis in the ISP and provide more information about AEMO’s assumptions and the contingent factors that informs its forecasts.
The ISP will now include greater consideration of the broad range of demand-side factors that influence the identification of the optimal development pathway, including the uptake and orchestration of consumer energy resources and distributed resources, demand flexibility, electrification, and energy efficiency. The ISP will also provide more insight into AEMO’s assumptions about distribution network development opportunities where these are consistent with the efficient development of the power system.
The final rule largely aligns with the draft rule with minor changes to incorporate stakeholder feedback and improve clarity.
We have also published a final determination and final rule for the Better integrating gas and community sentiment into the ISP rule change. You can find more information here.
Background
On 3 June 2024, the AEMC received a rule change request from the Minister for Climate Change and Energy to amend the National Electricity Rules (NER) to improve consideration of demand-side factors in the ISP.
The ISP is the primary planning document to guide investment in electricity infrastructure to meet energy demand in the National Electricity Market (NEM). It is prepared by AEMO and published every two years over a 20-year forecast horizon. There have been significant changes to the NEM since the ISP was first published in 2018, and there are now a broader range of factors that are influencing the development of the system.
The rule change was submitted following a review of the ISP carried out by the Energy and Climate Change Ministerial Council (ECMC) to consider whether its scope and function remain fit-for-purpose to support the energy transformation. The review concluded that there are opportunities to improve the ISP by enhancing AEMO’s consideration of factors critical to the energy transformation. You can view the ECMC’s response to the review here.
The intent of the amendments proposed by the Minister was to improve the quality of the analysis underpinning AEMO’s demand projections and its assessment of the additional utility-scale generation required to meet that demand.
The Minister also submitted two other rule change requests to enhance the ISP by expanding its consideration of gas market information and more explicit consideration of community sentiment. The AEMC has consolidated these two rule change requests and you can find more information by visiting the project page here.