Rule Change: Completed
Overview
On 28 March 2024, the Australian Energy Market Commission (AEMC) made a final determination and more preferable final rule to improve market arrangements for security services in response to rule change requests from Hydro Tasmania and Delta Electricity.
Essential system services (ESS) are critical to maintaining overall power system security by meeting core power system requirements. As such, the final rule builds on existing tools in the power system to enhance system security procurement frameworks. It also provides the Australian Energy Market Operator (AEMO) with new tools to manage system security. This will address system security issues through the transition, reduce the regular and inefficient use of directions, and provide better incentives for participants to invest in providing system security in the longer-term. It also increases transparency on current system security needs and understanding, and how AEMO plans to manage system security as we transition to a secure net-zero emissions power system.
The final rule:
- aligns the existing inertia and system strength frameworks’ procurement timeframes
- removes the exclusion to procuring inertia network services and system strength in the NSCAS framework
- adjusts TNSP cost recovery procedures for non-network security options to support efficient contracting arrangements and minimise volatility for electricity consumers
- creates a new transitional non-market ancillary services (NMAS) framework for AEMO to procure security services necessary for the energy transition and to trial new sources of security services
- empowers AEMO to enable (or ‘schedule’) security services with a whole-of-NEM perspective
- improves directions transparency
- introduces a new annual reporting requirement on AEMO, known as the ‘transition plan for system security’ (or transition plan), in which AEMO will report annually on the steps it will take to manage security through the transition.
Overview of the rule change process
Hydro Tasmania’s rule change request, received 19 November 2019, proposed an approach where system services would be procured within the spot market and the need for system services would be determined by binding constraints. This would involve the creation of a “synchronous services market” which would be integrated with the existing energy and FCAS spot markets.
Delta Electricity’s rule change request, received on 4 June 2020, proposed an approach where system services would be scheduled ahead of time outside of the spot market. System needs would be identified through the short-term project assessment of system adequacy.
The Hydro Tasmania and Delta Electricity rule change requests were consolidated on 2 February 2022, pursuant to section 93 of the NEL.
Key dates for this rule change
Rule change request received (ERC0290) – 19 November 2019
Rule change request received (ERC0306) – 2 July 2020
Consultation paper published – 17 July 2020
- Submissions due – 13 August 2020
- 43 submissions received
Directions paper published – 9 September 2021
- Submissions due – 21 October 2021
- 22 submissions received
Rule change requests consolidated pursuant to s93 of the NEL – 2 February 2022
Draft determination and rule published – 21 September 2022
- Submissions due – 17 November 2022
- 21 submissions received
s107 extension of time granted to publish draft determination and rule (due to complexity of issues) – 24 September 2020, 9 March 2021, 17 June 2021, 24 November 2021, 22 June 2022, 25 August 2022
s108A report published giving reasoning for a rule not being made within a year of initiation – 17 June 2021
Directions paper published – 24 August 2023
- Submissions due – 28 September 2023
- 22 submissions received
Transitional services update paper published – 14 December 2023
- Submissions due – 1 February 2024
- 11 submissions received
s107 extension of time granted to publish final determination and rule (due to complexity and difficulty of issues raised by stakeholder submissions to draft determination) – 22 December 2022, 25 May 2023, 1 November 2023
Final determination and rule expected completion – 28 March 2024
| Commencement dates |
|---|
| Schedule 1: 3 June 2024, immediately after the National Electricity Amendment (Integrating energy storage systems into the NEM) Rule 2021 No. 13. [transitional services (with exceptions in savings & transitionals) and relevant definitions] |
| Schedule 2: 4 July 2024 [reporting on directions and Transition Plan] |
| Schedule 3: 1 December 2024 [all inertia framework and NSCAS gap] |
| Schedule 4: 1 December 2024 [all TNSP cost recovery and pass through] |
| Schedule 5: 2 December 2025 [all system security services and enablement framework] |
| Schedule 6: 1 December 2024 [Substituted and New Definitions for cost recovery] |
| Schedule 7: 1 December 2024 [Substituted and New Definitions for inertia] |
| Schedule 8: 2 December 2025 [Substituted and New Definitions for system security services] |
| Schedule 9: 4 April 2024 [transitional] |