Interim Security Measures

COAG Energy Council decision – interim measures to improve security

At its meeting on 20 March 2020, the Council considered a range of actions to improve security in the National Electricity Market (NEM). 

That included noting the System Security Workplan reflecting the regulatory and technical tasks that are either already underway or scheduled to be underway in order to promote system security.  The workplan builds on a number of recent rule changes that address system security challenges. 

Ministers also agreed that the ESB should coordinate action across the market bodies to implement a range of interim measures detailed to improve visibility of, and confidence in system security services and, if applicable, implement improvements in the current Short Term-PASA, pre-dispatch and dispatch processes to ensure security can be maintained while new market arrangements, including ahead markets, are developed. A first stage of improvements will be implemented ahead of the 2020/21 summer and the balance of measures by the end of June 2021.

Background

AEMO has undertaken significant analysis to demonstrate the need for greater visibility of resources ahead of time. 

The increasing penetration of variable renewable energy generation and distributed energy resources displacing synchronous generation is challenging how essential non-energy services are procured and dispatched. This increases the complexity and the need to co-optimise resources ahead of dispatch.

Operation of the power system in real-time requires an efficient mix of resources available to be dispatched to provide energy and technical properties essential to maintaining system security and reliability of supply.

Technical properties such as inertia and system strength used to be provided at no cost as a by‑product of synchronous generation. The change in the generation mix is making some of these technical services that used to be abundant, now scarce at times, and the current market design does not provide any price signals or market-based scheduling process to make them available. In fact, when there is an abundance of zero marginal price energy from renewable sources, the wholesale price will reduce accurately valuing the marginal price of energy and pushing out higher cost plant while not incorporating the value of providing these other system services. AEMO must rely on interventions, which are inefficient in the short and longer term.

A well-functioning electricity market needs to ensure that all services critical to the reliable and secure supply of electricity are available whenever needed in real-time. To achieve this, there is a need to establish formal market mechanisms for key system services to be explicitly procured and incorporated within the NEM’s scheduling. 

Key Issues

  • The ESB’s Health of the NEM report rates system security as the most critical issue facing the NEM now and into the future. System security is a more immediate concern than reliability.
  • A secure system is a necessary but insufficient precondition to maintaining reliability. To be secure the electricity system must operate within defined limits of frequency, voltage, inertia and system strength and be able to maintain that through disturbances. Failure to do so can seriously damage a power system and lead to significant supply interruptions.
  • Increasing penetration of variable renewable energy resources and distributed energy resources is making it more difficult to maintain security.
  • As recognised in the health of the NEM there are significant concerns about security. There has been substantial progress in putting in place new and amended regulatory frameworks to date to assist in maintaining system security as well as giving new tools to the system operator.
  • In addition, there is a substantial future work program underway to continue to evolve regulatory frameworks and give the system operator new tools they need to manage the system effectively. In order to increase transparency of existing work on foot (rule changes that have been lodged with the AEMC; and projects being undertaken by AEMO) as well as to set out timeframes for the progression of changes to the system security framework, the ESB has developed a forward work program on system security. This reflects the regulatory and technical tasks that are either already underway or scheduled to be underway in order to promote system security and builds on the frequency control work plan that the AEMO and the AEMC have developed. The ESB will periodically update stakeholders on progress of the plan.
  • The ESB and market bodies are proposing a range of other measure to improve system security (and reliability), these include:
    • Ahead markets, two sided markets and access reform
    • Governance of DER device standards

Visibility of, and confidence in, system security services

While these reforms are developed and implemented, the ESB has identified a range of potential interim steps to improve visibility of and confidence in resources leading to more accurate information that AEMO can rely upon to operate the power system. These are interim measures and do not address all the issues and so do not replace the need for comprehensive and enduring solutions as outlined in the preceding paragraph. Rather they are modest measures consistent with the current market design which will improve outcomes while more fundamental reforms are designed and implemented.

The interim measures under consideration include:

  • The provision of information from scheduled generation units of commitment timeframes, cost and operating information to assist potential intervention decisions. (AEMO)
  • Semi-scheduled plant being required to continually inform AEMO of any restrictions on their available capacity due to physical factors, ambient weather conditions and their market intentions. (AER)
  • Consideration to requiring large loads of a certain size and type to submit the intent to respond to spot markets. (AEMO)
  • Clear notice periods and potential constraints on scheduled generators changing their commitment and decommitment decisions at short notice. (AEMO)
  • That semi-scheduled generators to be obligated to follow their dispatch targets, in a similar manner to scheduled generators. (AER)
  • That compensation mechanisms be reviewed to determine whether compensation should be payable if the generator in question changes its intentions to commit or decommit at short notice and whether other refinements to the compensation regime are warranted. (AEMO and AEMC)
As work on the detailed implementation of these proceed, they may be modified to meet the intent while minimising any additional imposts on market participants.
 

Timing

Some of the measures proposed have been examined or are being examined by the AER or AEMO.  This should allow early development of Rule changes and implementation ahead of the summer of 2020/21.  Others require further work but should be able to be implemented by the end of June 2021.

Further information will be provided to stakeholders soon and a program to develop Rule changes and consult on them will be published. 

Please contact Sebastien Henry in relation to the System Security Workplan at sebastien.henry@aemc.gov.au and Craig Oakeshot in relation to the visibility of and confidence in security services at craig.oakeshot@aer.gov.au

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