Energy regulatory updater – September

Australia Publication September 31, 2017

In the month of September, we saw a large number of electricity industry developments and initiatives by the National Electricity Market regulator, operator and rule maker.

The AEMC has both made, and declined to make, rules affecting networks and generators. We perceive there to be a desire by the AEMC to balance the need to support new generation (including new technologies) without imposing unnecessarily stringent administration and technical requirements, whilst also improving settings for reliability and security. This includes the following.

  • The AEMC declined to make a rule change that would have, among other things, reduced the generation capacity threshold for the requirement for intermittent generation to register as a scheduled generator (and comply with what can be more burdensome requirements related to market participation)

  • The AEMC has made a draft decision indicating that it is minded to reduce the settlement period for the electricity spot price from 30 minutes to 5 minutes. The logic is that “Price signals that align with physical operations lead to more efficient bidding, operational decisions and investment. However, a 3.5 year transition period would apply to allow for hedge market and other necessary adjustments.

  • The AEMC made a final rule to manage power system fault levels by requiring networks to maintain minimum levels of system strength to keep the system stable. 

  • The AEMC made a final rule to manage the rate of change of power system frequency by requiring networks to provide minimum levels of inertia.   It has also opened up consultation on creating a market to obtain and pay for inertia above minimum levels to provide additional benefits in reducing frequency volatility.

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