Regulator seeks quick fix to stop wind and solar farms ducking out of market

The Australian Energy Regulator has finalised its proposed rule changes to the operation of wind and solar farms to stop them suddenly withdrawing capacity from the market in the face of negative prices.

The AER has been working on changes to the rules surrounding “semi scheduled” generators for the last few months, initially attracting a furious response from wind and solar generators with a series of options that many considered heavy handed.

These included eliminating the “semi-scheduled” category that has been created for large scale wind and solar farms, or setting a fixed megawatt target.

A compromise approach was put forward in late August, and the regulator has now finalised the intent of that proposal which is designed mostly to stop wind and solar farms dropping out of the market without warning, and are encouraged to follow the output assumed by the availability of the sun and the wind.

In its simplest form, it requires wind and solar to produce more or less the capacity expected or forecast from the prevailing conditions, and if they do want to duck out of the market to avoid things like negative prices, then they have to do what coal, gas and hydro plants do, and tell the market operator in advance – even it is only five minutes ahead.

The regulator appears to be satisfied that the “light touch” approach will achieve the outcome it wants, and has asked the rule maker, the Australian Energy Market Commission, to fast-track approval so the revisions can be in place by the end of the year.

The increasing number of negative pricing intervals is causing more and more wind and solar farms – and coal, gas and hydro generators for that matter – to switch off or dial down their output. Some have contracts which require them to do this.

The AER, and the market operator, are insisting that this be done in an orderly manner, and that AEMO is given advance notice.

They argued that the growing capacity of wind and solar farms – now at more than11,000 megawatts of installed and commissioning capacity, and forecast to account for 56% of the installed capacity in the main grid by 2035, and up to 100 per cent instantaneously on some occasions, means this rule is essential.

“Due to this rapid increase in the amount of semi scheduled generation, the limited obligations required of them no longer allow AEMO to adequately manage the power system,” the AER says.

It says it believes that its detailed consultations with industry has addressed stakeholder concerns. “The final proposal substantially reduces the materiality of the proposed changes while still achieving their intention,” it says.

ER Chair Clare Savage said the proposed rule change would enable the Australian Energy Market Operator to more effectively manage system security.

“If the sun is shining and the wind is blowing then the market operator needs semi scheduled generators to produce the energy they say they will,” AER chair Clare Savage said in a statement.

“As is the case for other types of generation, semi scheduled generators should not be able to just turn off in the face of low or negative prices without proper notification.

“We worked very closely with wind and solar operators and the market operator, and consulted widely with industry to ensure this rule change would work and retain flexibility for semi scheduled generators to fully use the available wind and sun whenever there is room on the network.

The wind and solar industry appeared to be happy with the compromise. “They have taken on board industry’s concerns with the initial proposal and revised their proposal to address these concerns,” said Lillian Patterson, director of energy at the Clean Energy Council. Other industry figures agreed.

The rule changes and submissions can be found here.