Authorities are redefining ‘reliability’ to respond to the rise of renewables. 

The Australian Energy Market Commission (AEMC) has released a consultation paper ahead of a review of the nationwide reliability standards and settings.

It seeks feedback on the effect of changes that demand-side resources, like rooftop solar and battery storage, are having. 

It also highlights the need for a more “flexible” and responsive grid. 

The AEMC’s consultation paper (accessible in PDF form, here) sets out the assumptions behind new reliability standards and settings. 

The reliability standard is a figure for an acceptable level of reliability in the national electricity market at the lowest possible cost. 

Given the transformation in the electricity market since the guidelines were first established, the time has come to update them.

“There still is a need to support stability and predictability in the market to the greatest extent possible, but there is also a need to align and have regard to the market changes and post 2025 reforms going forward,” the paper says.

“The Panel considers the benefits from stability may no longer outweigh the benefits of a flexible framework in a changing environment.”

The authorities are considering the effect of changes on both the supply and demand side of the wholesale market, with enormous amounts of distributed renewables coming online, as well as the increase in demand-side participation in storage.

It is also looking at the exit of coal thermal scheduled generation.

One key issue is the increase in battery storage capacity, which is changing the way that the wholesale market responds to peak market events. Dealing with these peaks has typically been the preserve of gas plants.

“Traditionally, Open Cycle Gas Turbines (OCGT) plants have been the technology type that responds to peak market events in times of temporary scarcity and very high prices,” the AEMC says.

“However, battery storage is expected to become increasingly prominent in setting and responding to high prices. Further, the increasing investment in storage capacity means that intra-day price volatility is becoming a progressively more important revenue source and investment signal.”

The review will cover mechanisms including the market price cap (MPC), market floor price (MFP), cumulative price threshold, and the administered price cap (APC).

The next reliability standard and settings review will commence in mid-2021 and must be completed by April 2022.

Stakeholders are invited to make submissions to the consultation paper by 8 April 2021.