Proposed rule change ISSUES PAPER Justin Oliver, Craig Oakeshott 2 - PowerPoint PPT Presentation

Semi scheduled generator – Proposed rule change ISSUES PAPER Justin Oliver, Craig Oakeshott 2 July 2020 aer.gov.au 1

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Meeting housekeeping • Please mute microphones unless speaking • Please turn video off to reduce bandwidth burden • Slides are on the AER website • If you are on the phone – email questions to Wholesaleperformance@AER.gov.au • Please feel free to use the chat functions for any questions or comments – we will pause regularly for discussion. 3 aer.gov.au

Agenda • Introduction - Justin Oliver • Background and AER timeline • Issue paper overview • Proposed rule change request • Discussion 4 aer.gov.au

The rule change proposal request • COAG EC requested the AER prepare two rule changes relating to the operation of semi scheduled generators: – Semi scheduled generators to be obligated to follow their dispatch targets, in a similar manner to scheduled generators; and – Semi scheduled generators being required to continually inform AEMO of any restrictions on their available capacity due to physical factors, ambient weather conditions and their market intentions. 5 aer.gov.au

Issues paper • This is a discussion about the content of our issues paper – The paper is designed to promote discussion and get submissions regarding alternatives – There are a series of questions posed in the paper and we are seeking feedback on those and the options presented – This discussion today should assist all to understand more fully the background, the need and alternatives. 6 aer.gov.au

AER timeline Date Project step 24 June 2020 Issues paper released 2 July 2020 Stakeholder forum 24 July 2020 Submissions close End of August 2020 AER submits rule change proposal to AEMC • Consultation before submitting to AEMC for consideration of fast tracked rule change proposal #1 7 aer.gov.au

What is the issue? • Current obligations – Stay below a semi dispatch cap in a semi dispatch interval • AEMO not certain of response – NEMDE balances forecast demand against forecast generator performance (targets) – If that performance doesn’t occur then • Contributes to poor frequency performance • Consumes more FCAS • Poorer price forecasts • Power system uncertainty 8 aer.gov.au

What is the issue? • Not about forcing semi scheduled generators to – Operate in negative prices – Operate when they don’t want to – Operate beyond the resource availability • It is about confidence in – pre-dispatch, dispatch and price forecasts – power system security – long term certainty and development 9 aer.gov.au

Example 1: Negative price response 10 aer.gov.au

Example 2: High ramp rate output changes 160 140 120 100 MW 80 60 40 20 0 8:30:00 8:35:00 8:40:00 8:45:00 8:50:00 8:55:00 9:00:00 9:05:00 9:10:00 9:15:00 9:20:00 9:25:00 9:30:00 9:35:00 9:40:00 MW MW Target 11 aer.gov.au

The problem to be addressed • Semi scheduled category created 2008 • Not many plant installed in the NEM • Less stringent obligations • Over 8,700 MW installed in the NEM and rising Now • Forecast to be dominant form of generation in to the future • Still same less stringent obligations 12 aer.gov.au

Forecast growth • Renewable energy projects dominate development • AEMO studies show integration challenges 50,000 100% 40,000 80% % of installed MW installed 30,000 60% 20,000 40% 10,000 20% 0 0% 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 Year Semi Scheduled generation (Wind + Solar). Semi Scheduled calacity as a % of total installed capacity (excluding storage) 13 aer.gov.au

Instantaneous penetration of wind and solar generation, actual in 2019 and forecast for 2025 under ISP Central and Step Change generation builds 14 aer.gov.au

Changes in 1-hour underlying demand and VRE 15 aer.gov.au

RC1: SSGens following dispatch targets – non preferred options I • Causer Pays Factors – increase economic incentives to make it more costly to deviate from targets – 28 day averaging blunts effectiveness – Signal not insignificant but not closely correlated • Registration requirements – prohibit the installation or use of either systems or procedures that allow for, or automate, a reaction to price that does not match their target 16 aer.gov.au

RC1: SSGens following dispatch targets – non preferred options II • Amend existing arrangements – for SSGens to : • Follow an Energy Target instead of MW – accommodates variations in resource within 5-minute intervals. – megawatt target from AWEFS/ASEFS or self forecast converted to MWh. – Causer pays would be challenging and SGen targets not the same as SSGen targets – Operate as an inflexible generator • advise AEMO of a fixed MW dispatch level • don’t set price but follow their target • some constraint precedent rules would need changing 17 aer.gov.au

RC1: SSGens following dispatch targets – preferred options considered I • Amend existing arrangements for SSGens. – remove semi scheduled dispatch interval and cap – dispatch instructions are to be followed by the participants subject to the availability of their dependent resource. – NER cl 4.9.8 – follow dispatch instructions unless – Injure people or damage plant or – Providing other system services And add – Loss of Resource 18 aer.gov.au

RC1: SSGens following dispatch targets – preferred options considered II • Remove the SSGen classification. – Dramatic change to the rules – many clauses to be addressed – SSGens are treated the same as SGens – Need careful consideration of resource implications – Differentiating between compliance and conformance – Amend 4.9.8 the same way 19 aer.gov.au

RC 2: Better information provision • Will depend on the 1 st rule change • Could be addressed by changes to AEMO operational and forecasting procedures • Not seeking to be fast tracked 20 aer.gov.au

Discussion and Questions 21 aer.gov.au

Contact us • Questions and submissions should be sent electronically to wholesaleperformance@aer.gov.au. 22 aer.gov.au