The Australian Energy Market Commission (AEMC) has released its final power system security report which makes nine recommendations for changes to market and regulatory frameworks  to guard against technical failures that lead to cascading blackouts.

The AEMC’s power system security review was initiated in July 2016 to strengthen the security of the National Electricity Market (NEM).

AEMC Chairman, John Pierce, said he was pleased to release the review’s final report to deliver a more stable and secure power supply to Australian homes and businesses. He also called for submissions on proposed rules to stabilise the grid in relation to frequency management and system strength.

Mr Pierce said the rules address risks to energy security created by the power system’s changing generation technologies – as more non-synchronous, lower emission generators like wind and solar come in; and synchronous generators like coal retire.

“We are focused on the power system’s evolution. Our reform package is looking at ways to stabilise the system as the generation mix changes, and new technology generators connect,” Mr Pierce said.

The AEMC started making new rules on system security in early 2017. The package released builds on that work which has already expanded the risk management role for the Australian Energy Market Operator (AEMO) to detect emerging security issues and take preventive action.

The AEMC’s report was welcomed by AEMO Chief Executive Office, Audrey Zibelman.

“AEMO welcomes the publication of this system security review report and draft rules by the AEMC. We acknowledge the progress made on these important matters and look forward to continuing the collaborative work to ensure the services required for the secure operation of the power system remain available in the future,” Ms Zibelman said.

Mr Pierce said the proposed rules to better manage frequency and strengthen the system will involve AEMO and the networks implementing solutions together.

The new plan for power system security:

  • Makes networks provide minimum levels of inertia where inertia shortfalls are identified by AEMO
  • Enables networks to contract with suppliers of inertia substitutes like fast frequency response services from emerging technologies like batteries, when providing these minimum levels, if AEMO agrees
  • Gives AEMO more tools to increase inertia and help keep frequency in required operating bands
  • Includes faster emergency frequency control schemes to strengthen the ‘last line of defence’ to help stop system-wide blackouts
  • Makes networks responsible for maintaining a minimum level of system strength for each connected generator
  • Requires new connecting generators to pay for remedial action if they would cause minimum system strength for other generators to be breached
  • Foreshadows a new market-sourcing mechanism for inertia services and facilitates greater use of new technology like battery storage to backup the system when something goes wrong

“The NEM is a far more complex interconnected system of renewable and non-renewable energy generation,” Mr Pierce said.

Technical parameters of the system need to be maintained as it transforms: inertia is necessary to absorb shocks that affect the frequency of the system; and the system has to be strong enough to keep voltage stable so generators can stay connected to the grid.

“The AEMC started this review as it became evident that different arrangements were needed by AEMO and transmission companies to secure the system stabilise the network as the changing generation mix accelerated.”

“The draft rule changes are focused on making sure the grid can continue to be operated securely and provide energy to consumers,” Mr Pierce said.

The package is consistent with the system security outcomes recommended by the Finkel review.

The AEMC will continue collaborating with AEMO and the Australian Energy Regulator to conclude consultation on the draft rules and implement the new framework for power system security.

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