AEMC delays key system strength reforms by another four months

The Australian Energy Market Commission has delayed the deadline for publishing draft rule changes designed to increase the role of transmission network companies in maintaining system strength within the electricity system, and reforming a ‘system strength’ regime that has attracted the ire of wind and solar developers.

The AEMC is currently considering a number of proposed rule changes, that seek to reform the way ‘system strength’ is accounted for in planning the energy system. The current ‘system strength’ regime has been declared unworkable, with a ‘do no harm’ requirement seeing many new wind and solar developments being hampered by the current inconsistent, and widely disruptive, regime.

The AEMC was due to deliver a draft determination on proposed new rules before the end of the year, but has said it will now deliver new draft system strength rules in late April 2021.

The proposed reforms will consider three key issues, including the introduction of new planning standards for transmission network operators, new connection standards for new generators that reduce the need for system strength requirements, and a new charging mechanism to ‘send investment and locational price signals’ to new generators.

The AEMC said that the extension was necessary, due to the complexity of the proposed reforms, and that further work was required to finalise draft rules that could be taken to full consultation with relevant stakeholders.

“While this development is progressing well to date, there is further detail and analysis required for the Commission to be able to make a draft rule determination.,” the AEMC said in a statement.

“As such, the Commission views it as prudent for an extension to allow this analysis and collaboration with stakeholders – especially AEMO, the Australian Energy Regulator (AER), and the Energy Security Board (ESB).”

“This extension also allows for this work to be advanced at the same time as consideration of operational measures for the scheduling and additional procurement of system services, which are currently being progressed through both the ESB’s post 2025 market design project, which includes work on essential system services and scheduling and ahead market design.”

The AEMC said that the extension would also enable further work to be undertaken as part of a wider post-2025 redesign of the National Electricity Market being undertaken by the Energy Security Board.

System strength reforms have emerged as a major concern for wind and solar developers, who have experienced haphazard application of the existing rules, which has caused project delays and have been a major source of uncertainty for investors.

There has been broad support for the proposed changes, put forward by network operator Transgrid, which would establish a more coordinated and centralised process for undertaking decisions around system strength issues.