AEMC offers new incentives to maintain power system frequency

The Australian Energy Market Commission (AEMC) will introduce a financial incentive for market participants who help to control the power system frequency required to keep the grid stable and keep costs down for consumers

Power tower

Frequency varies whenever electricity supply does not exactly match consumer demand and uncontrolled changes in frequency can cause blackouts. Primary frequency response is an automatic change in the generation or consumption of electricity from a generator or load in response to changes in system frequency.

The ability to provide frequency response to keep the grid stable is becoming important, as lower cost, variable inverter connected generation such as batteries, wind and solar displace thermal generators in the system.

The new frequency performance payments will incentivise market participants to operate their assets in a way that will reward both power generation and load to help provide primary frequency response to control system frequency and keep it stable.

AEMC Chair Anna Collyer said the new arrangements will be introduced as part of a final determination and rule announced today and build on an existing ‘causer pays’ process that allocates costs for regulation services to market participants that cause the need for corrective action.

“Grid security and essential system services have been identified by the Energy Security Board (ESB) as key priorities to support the transition to a low carbon energy future,” Ms Collyer said.

“These new incentive arrangements will support the delivery of frequency control by those who are best placed to provide it, supporting the continued integration of clean energy into the grid.

"The arrangements will also minimise the costs of critical frequency control services needed to keep the power system stable.”

In addition to frequency performance payments, the Commission has confirmed an existing mandatory primary frequency response requirement applicable to large scheduled and semi-scheduled generators will endure beyond the planned sunset date of 4 June 2023.

The AEMC’s new rule also includes additional reporting requirements for the Australian Energy Market Operator (AEMO) and the Australian Energy Regulator (AER) in relation to frequency performance and the costs of frequency performance payments.

More information about the rule change can be found here.

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