Announcement date
22/09/2022
Link to announcement
https://www.aemc.gov.au/rule-changes/improving-security-frameworks-energy-transition
Problem being addressed
The National Electricity Market (NEM) is going through a significant transformation, with the generation mix changing due to decarbonisation, changing technology costs, and consumer preferences.
Power system security is becoming more challenging to manage through this energy transition process. Power system security relates to the technical parameters of the power system such as voltage and frequency, the rate at which these parameters might change and the ability of the system to withstand faults. The NEM’s regulatory and market frameworks were originally designed around a power system made of primarily synchronous generation which inherently provide an abundance of security services as a by-product of energy generation. However, fewer of these services are being provided as the generation mix changes to inverter based resources, which connect to the power system through power electronics, and do not automatically provide all types of security services as a by-product of generation.
During the energy transition system security may be scarce as synchronous plant retires, and as the Australian Energy Market Operator (AEMO) learns about, and tests, the capabilities of new technology. AEMO requires additional tools to manage system security to ensure the integrity of the grid.
Proposal
The Consultation Regulation Impact Statement considered a rule change to ensure that sufficient security services are operationally available and scheduled, in order to maintain power security without requiring market interventions. Specifically, the Consultation Regulation Impact Statement considered two rule changes requests from Hydro Tasmania and Delta Electricity, which each proposed operational procurement mechanisms to value, procure and schedule essential system services to help keep the system secure.
Assessed Impact Analysis outcome
Compliant
Assessment comments
The draft determination and rule were open for submissions from 21 September 2022 to 17 November 2022.
On 28 March 2024, the Australian Energy Market Commission (AEMC) made a final determination and final rule to improve market arrangements for security services (Improving security frameworks for the energy transition | AEMC). The Office of Impact Analysis (OIA) did not formally assess the Decision Regulation Impact Statement following changes to the Regulatory Impact Analysis Guide for Ministers’ Meetings and National Standard Setting Bodies in June 2023.