Rule Change: Open
Overview
On 2 March 2023, the Australian Energy Market Commission (AEMC) initiated a rule change request from the Australian Energy Council (AEC) proposing an ancillary service spot market for inertia in the national electricity market (NEM) to ensure the secure and efficient operation of the power system through the energy transition. We released a consultation paper considering future inertia system needs and options for inertia provision – both in planning and operational timeframes.
The AEMC will now publish a directions paper by November 2024
The Commission will progress the rule change with the publication of a directions paper by November 2024. The directions paper will investigate the key economic and technical considerations of options for managing inertia in operational timeframes – including the inertia spot market proposal.
This consideration of operational procurement of inertia will follow on from consideration of the long-term inertia procurement in the Improving Security Frameworks for the Energy Transition rule change.
The directions paper will be informed by technical advice on the characteristics of inertia.
Given the complexities involved in understanding various technical and economic issues, and to allow time to consult with stakeholders on the directions paper, the Commission has formally extended the timeframe for a draft determination to 27 June 2025.
Overview of the rule change process
On 2 March 2023, the Australian Energy Market Commission (AEMC) initiated a rule change request from the Australian Energy Council (AEC) proposing an ancillary service spot market for inertia in the national electricity market (NEM) to ensure a secure and efficient operation of the power system through the energy transition.
- On 2 March 2023, the AEMC published a consultation paper to seek stakeholder feedback on:
key challenges arising from declining system inertia and the adequacy of the existing inertia framework in ensuring the secure and efficient operation of the power system in the long-term; - further work required to better understand the power system needs and inform the development of a long-term inertia arrangement; and
- AEC’s inertia spot market proposal and other alternatives.
Given the complexities involved in both the proposal to establish a new inertia spot market in the NEM, and understanding power system needs for inertia and evolving technological capabilities to provide it, the Commission has extended the timeframe for a draft determination to 27 June 2025.
The Commission also released the reasoning behind a rule not being made within a year of the initiation of the rule change request on 15 February 2024. This s108A report is provided below.