Rule change proposes paying big batteries to “charge as needed” when rooftop solar floods the grid

A new electricity market mechanism that would pay big batteries to be ready to “charge as needed” during times of minimum demand, such as when the grid is flooded with solar during the middle of the day, has been formally proposed by the Clean Energy Council.

In a rule change request submitted to the Australian Energy Market Commission, the CEC proposes the introduction of a new market ancillary service called the minimum system load (MSL) reserve, to address the increasingly urgent issue of ultra-low and negative demand.

This “co-optimisable market ancillary service,” the submission says, would provide specific volumes of load response over specific time periods, allowing the market operator to more effectively manage system security risks during minimum system load periods.

MSL or minimum demand usually happens when there is an oversupply of power at times of high variable renewable generation, and when coal plants bid into negative prices to avoid being shut down. It also points to a lack of storage and flexible load, and insufficient transmission capacity to export to other regions.

Plenty of big and small batteries and transmission upgrades are in the pipeline, but while they play catch-up – and as ageing coal plants become less and less reliable – managing record-breaking demand lows is an increasingly risky business.

In South Australia, for example, the wholesale electricity market experienced negative prices for 659 hours over the first three months of the year, or for a whopping 30 per cent of the first quarter of 2025, according to Rystad Energy.

The CEC notes that the Australian Energy Market Operator (AEMO) has forecast that MSL-related system security issues could arise as early as this year in the case of unplanned outages, and by 2027 under system normal conditions. 

And it says that the range of short-term emergency solutions currently favoured by AEMO to manage MSL – including the big solar switch-off button and transitional battery contracts – “do not represent a desirable outcome” for any parties, least of all consumers.

In the case of Type 1 transitional contracts, for example, the CEC submission says these would likely favour market incumbents instead of fostering more competition or boosting the investment case for new battery energy storage systems (BESS).

By contrast, it argues, the proposed MSL rule change “would result in a competitive, efficient and market-based approach to address the system security challenges created by minimum and negative demand. 

“Additionally, it would provide a transparent signal to market participants that can be clearly understood, and forecast across a range of time horizons, including operational and investment time horizons.”

According to the CEC submission, the proposed mechanism would mean storage systems or other loads participating in the spot market could be enabled and receive payment to reduce stored energy to provide “load headroom.” 

These registered MSL assets would get instructions to hold that dispatchable load capacity through trading intervals determined as necessary by AEMO from a power system security perspective. 

When needed, AEMO would issue dispatch instructions for the required level of MSL response, and the relevant assets would “charge” as needed, or undertake other behaviours that have the effect of increasing apparent operational demand.

“Market Participants would bid, or choose not to bid, into the MSL market one day ahead of time, the same as for the energy and FCAS markets,” the submission says. 

“AEMO would at all times set and dispatch the MSL response requirement if required, and the market would bid and set the clearing price to meet AEMO determined requirements.

“We anticipate this could operate in practice like the contingency FCAS framework whereby market participants are responsible to submit bids that they are capable of honouring,” the CEC says. 

“MSL response providers would allow AEMO to dispatch their resource in any trading interval during any MSL declaration period, charging or discharging in accordance with a dispatch instruction issued by AEMO until the MSL declaration was terminated.”