Many of the essential system services that support the grid, such as frequency response and inertia, have traditionally been provided as intrinsic by-products by thermal generation as part of producing energy and reserves. But as thermal plants retire, the supply of these critical services could dry up. Critical work needs to be done to value and procure essential system services like frequency, system strength, inertia and operating reserves that are key to supporting a changing generation mix. These services are necessary to keep the electricity grid in a safe, stable, and secure operating state. They influence the ability to balance supply and demand, deal with disruptions to this balance and address any other technical issues in real time. Much of this work is in train through rule changes with the Australian Energy Market Commission (AEMC) and will be delivered promptly to support a more secure and reliable system.
Backing up power system security is critical to keep energy reliable and affordable as more variable, non-dispatchable renewables join the grid.
Lack of essential power system services has cost consumers a lot of money in recent years as a result of expensive interventions needed to keep the grid system secure. New technical services, such as frequency, inertia, system strength, operating reserves, are needed as part of meeting the overall supply needs as the existing fleet continues to transition.
The national electricity market currently has over 17GW of wind and solar capacity installed. By 2025, this is expected to increase to at least 27GW of wind and solar capacity (including grid scale and domestic rooftop solar). Coal, gas, and hydro (synchronous) generation provide services like inertia, frequency control and system strength as by-products. They are not generated by wind or solar (asynchronous) energy in the same way, so must be provided and paid for separately.
Without the physical capabilities needed to keep the system stable and secure, the system becomes weaker and harder to control. AEMO is increasingly having to intervene in the market to keep the system secure which means the cheapest energy may not always be dispatched. Challenges such as balancing the system and maintaining stability where grid demand drops to almost non-existent levels, is now an urgent reality in parts of the NEM with the high penetration of solar PV resources.
What we’re doing
Keeping the lights on for consumers is the ESB’s top priority. This work program has already been putting new rules in place progressively across recent years as the market redesign work has been underway.
The ESB’s objective is to ensure the system has resources and services when needed to manage the complexity of dispatch and to deliver a secure supply to customers.
The ESB is working closely with the Australian Energy Market Commission (AEMC) on rule changes that are developing these arrangements. Stakeholder feedback received by ESB is being used as an input in the AEMC’s comprehensive statutory consultation processes.
Where to next?
The ESB is working closely with the Australian Energy Market Commission (AEMC) on rule changes that are developing these arrangements.