Rule Change: Completed
On 2 December 2021, the Commission made a more preferable final rule in response to a rule change request from the Australian Energy Market Operator (AEMO).
The final rule makes several changes to better integrate storage and hybrid systems, and allow greater participation in the market. It also adds flexibility into the rules to create a framework that facilitates innovation in how the market supplies energy reliably and securely to meet the longterm interests of energy consumers.
Final rule determination
The final rule makes a number of changes that better integrate storage into the NEM. They also shape the rules to facilitate the future market where storage and hybrid systems e.g. a battery and a solar farm behind a single connection point, are likely to play a much bigger role in firming up the growing amount of renewable energy, The changes include:
- A new registration category, the Integrated Resource Provider (IRP), which would allow storage and hybrids to register and participate in a single registration category rather than under two different categories.
- Clarity for scheduling obligations that apply to different configurations of hybrid systems. This includes for DC coupled systems (which have different technologies behind a single inverter) who will have flexibility to choose whether those technologies are scheduled or semi-scheduled
- Transferring existing small generation aggregators to the new category, and enabling new aggregators of small generating units and/or storage units to register in this category. Market Customers will still be able to include small generating and storage units in their portfolios
- Enabling aggregators registered in this new category to provide market ancillary services from generation and load.
- Amending the framework to recover non-energy costs based on a participant's consumed and sent out energy over relevant intervals, irrespective of the participant category in which it is registered.
The Commission's final decision maintains the existing framework to allow transmission-connected storage to choose between connecting under a negotiated agreement at a negotiated price, or the prescribed service and corresponding prescribed transmission use of system (TUOS) charge.
The Commission notes existing grid-scale storage will transfer to the IRP category and will not incur a charge to do this. Under the final rule:
- Existing connection agreements remain unchanged as performance standards and other terms are not being impacted as a result of introducing the IRP.
- New transmission–connected storage participants will connect under the same framework existing storage participants have. And that Transmission Network Sservice Providers (TNSPs) will negotiate price and service levels that are consistent with those that have been negotiated for other transmission customers receiving the same service.
- New distribution-connected storage participants will receive a direct control service tariff or a storage tariff trial option, where offered.
The Commision notes feedback from some stakeholders supported an exemption from network charges for storage. This issue is broader than just storage or this rule change. The Commission considers the issue of how network costs should be recovered from participants, including storage and other large responsive loads expected in the future, should be considered more broadly. The Commission anticipates that one or more rule changes on this issue may be submitted by stakeholders. Should this occur, the AEMC will prioritise any such rule change in the 2022-23 financial year.
Energy storage is becoming an increasingly important part of the national electricity market (NEM) and recent forecasts point to a greater role for storage in the future. This requires the regulatory framework to evolve to support the market as it transitions.
On 23 August 2019, the AEMC received a rule change request from AEMO to support the participation of storage systems in the NEM, including by defining storage technologies in the National Electricity Rules (NER).
The rule change proposal sought to address issues AEMO identified with how grid-scale batteries, aggregations of smaller batteries, and new business models with a mix of technologies behind the connection point (hybrid facilities), register and participate in the NEM.
AEMO's rule change request proposed to define storage and hybrid facilities, so that the NER better recognise storage and connection points with bi-directional flows.
In AEMO’s view, the rule change proposal would increase clarity and transparency for all stakeholders, remove barriers to entry for storage and hybrid facilities, and support the transition to an electricity system where more storage is needed to support variable renewable energy (VRE).
On 20 August 2020, the AEMC released a consultation paper to seek feedback on the significance of the issues identified by AEMO and whether these are likely to become more material in the future. This helped the Commission understand the importance and urgency of the issues, and whether they required a regulatory solution.
Submissions to the consultation paper closed on 15 October 2020 and the Commission received 38 submissions.
On 3 December 2020 the Commission extended the period of time for making the draft determination to 29 April 2021 under section 107 of the National Electricity Law (NEL). This allowed the AEMC to publish an options paper on 17 December 2020 seeking further stakeholder feedback on both the participation and non-energy costs recovery frameworks. Submissions to the options paper closed on 11 February 2021.
On 27 April 2021, the Commission extended the period of time for making the draft determination to 29 July 2021 under section 107 of the NEL.
The Commission made this decision because AEMO requested more time to consider the potential impacts from issues, not previously considered by AEMO, on its operating systems and procedures. The extension allowed us to jointly address any issues that arose.
On 28 November 2021, the Commission extended the period of time for making the final determination to 2 December 2021 under section 107 of the NEL.
The Commission made this decision to allow more time to consider the complexity of issues raised by stakeholders in their submissions to the draft determination.