Review into NEM regulatory frameworks

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The Australian Energy Market Commission (AEMC) have published an issues paper regarding its review of the regulatory and market frameworks needed to support frequency control in the national electricity market (NEM).  

The generation mix is changing. As newer types of generators like wind and solar come in, and conventional generators like coal retire, this is presenting challenges for the management of power system frequency. A decline in the provision of frequency response capability and an increase in connection of variable generating technologies has led to a recent deterioration in frequency performance. If frequency becomes unstable or changes too fast then the system is at risk of going black.

As well as exploring challenges facing frequency control in the power system, this review will explore opportunities to more effectively manage system security through new fast response technologies and distributed energy resources.

Areas for consideration include:

  • Primary frequency control drawing on AEMO investigations to assess whether mandatory generator governor response requirements should be introduced
  • Frequency control ancillary services in the transforming market and whether new technologies, like wind farms and batteries, offer the potential for frequency response services that act much faster than traditional services to more effectively control frequency
  • Distributed energy resources providing opportunities to support frequency control

There are trade-offs to be made between the risks and costs of meeting system security requirements. The objective of the review is to recommend the combination of changes that are necessary to provide a secure power system at the lowest cost to consumers.

The AEMC encourages stakeholders to share their views on the paper. Submissions are due by 5 December 2017.

The review is considering appropriate frequency control arrangements as the electricity system evolves. This work is part of the AEMC’s ongoing system security work program and progresses recommendations of the Finkel review into the future security of the NEM.

The review will also be informed by a technical working group, comprising network businesses, generators, retailers, energy service providers, consumer representatives, AEMO and the Australian Energy Regulator (AER).

The Commission will provide a progress report on the review to the COAG Energy Council by the end of 2017, with a final report due in mid 2018.

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