The Reliability Panel has completed a review of the current reliability standard for the national electricity system and has released a draft determination for stakeholder feedback.
The review found that the standard is well equipped to ensure the grid will remain stable through the energy transition.
The Reliability Panel forms part of the Australian Energy Market Commission but independently monitors, reviews, and reports on the safety, security, and reliability of the national electricity system. Its panel of expert advisers represents consumers, the energy industry, and the Australian Energy Market Operator (AEMO).
Its latest insights are set out in a draft determination for stakeholder feedback, following a decision by the Panel to undertake a review of the form of the reliability standard.
The reliability standard, a critical component of Australia’s energy system, ensures sufficient electricity supply to meet consumer demand and determines key market settings, such as the market price cap.
An essential part of its work is looking forward to find the right mix of investment signals to create the right mix of assets to support reliability. Getting that better understanding of the future is an important step to allow consideration of the changing reliability risks as the market transforms in a way that we have never seen before.
To understand that challenge better, the Panel developed a model to create an extreme future where there aren’t enough resources to meet the needs of customers.
Reliability Panel Chair, Charles Popple, said that insights such as those provided by the model, are critical to making sure Australia has sufficient investment in generation, particularly in the type and duration of storage it needs to manage reliability risk as the sector transforms.
“Our modelling, one of the first of its kind in Australia, provided us with interesting insights on potential reliability risks as the energy sector transitions,’’ Mr Popple said.
“It demonstrated that while the risk profile may change as we transition to more variable renewable generation, the current form of the reliability standard remains sufficient to provide investment and operational signals for the assets needed to manage the minimal risk of extreme reliability shortfalls in the future National Electricity Market.
“The Panel’s draft recommendation is therefore that the current form of the reliability standard is fit for purpose and can continue to strike the right balance between affordability and reliability as we transition to net zero.”
The Panel said that it recognises the challenges faced by the AEMO in managing reliability with conventional tools and supports AEMO’s efforts to improve communication of the reliability standard.
Additionally, the draft report recommends maintaining the current form of the administered price cap (APC), which acts as a safety net by capping wholesale prices following prolonged periods of extreme prices.
The Panel will regularly review the APC level to ensure generators and batteries continue to contribute to reliability during rare emergencies.
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