Rule Change: Completed
Overview
On 19 September 2017, the AEMC published a final rule to place an obligation on Transmission Network Service Providers (TNSPs) to procure minimum required levels of inertia or alternative frequency control services to meet these minimum levels.
The Commission considers that a secure power system demands the availability of minimum levels of inertia at all times and that an obligation on TNSPs to provide this service at the least cost possible. This will provide confidence that system security can be maintained in all regions of the National Electricity Market while minimising the cost to consumers.
The Commission has identified the following reasons for placing this obligation on TNSPs.
- The requirement for TNSPs to identify the least cost option or combination of options to provide minimum levels of inertia, together with the existing economic regulatory framework for TNSPs, will provide discipline on the level of expenditure on inertia network services by enabling the Australian Energy Regulator to assess the efficiency of that expenditure.
- Placing the obligation on TNSPs to provide inertia network services will provide a greater ability to coordinate the provision of inertia network services with other network support requirements for the relevant sub-network, such as system strength. This should result in a more efficient outcome for consumers in the long term by avoiding the potential duplication of investment.
Background
On 8 September 2016, the AEMC initiated the rule making process for the Managing Power System Frequency rule change request submitted by the South Australian Minister for Mineral Resources and Energy.
The South Australian Government considers that less synchronous generation in the NEM is leading to less inertia. This reduction in inertia is increasing the susceptibility of the system to rapid changes in frequency that arise as a result of system disturbances, which can lead to blackouts.
Historically, most generation in the NEM has been synchronous and, as such, the inertia provided by these generators has not been separately valued. As the generation mix shifts to smaller and more non-synchronous generation however, inertia is not provided as a matter of course giving rise to increasing challenges for the Australian Energy Market Operator (AEMO) in maintaining the power system in a secure operating state.
The shift to newer types of generation has been more pronounced in some regions of the NEM than others. South Australia, in particular, has experienced a substantially faster change than other regions as an increasing volume of non-synchronous generation is integrated. Flows on the interconnector with Victoria allow power system security to be maintained in normal circumstances because of inertia provided by generators in other parts of the NEM. Where there is an outage of this interconnector, the risks to system security in South Australia increase significantly because it must rely on inertia provided by generators within the region. This makes it harder to arrest the frequency change and restore the frequency to normal operating levels. As the generation mix changes in a similar way across the NEM, these risks may become more widespread.