AEMC publish final determination on rule change regarding the integration of storage systems into the NEM

Earlier today the AEMC published their final determination on a rule change relating to the integration of storage systems into the NEM.

The initial rule change request was submitted by the AEMO on 23rd August 2019 and sought to address issues with how the market operator identified and registered utility-scale batteries, aggregations of smaller batteries, and hybrid facilities.

 

The final determination

The final rule contained some key changes relating to the registration of storage and hybrid facilities:

  • An introduction of a new participant category — “Integrated Resource Provider (IRP)”, designated for storage and hybrid facilities.
  • Storage will be treated as a single unit for the purpose of dispatch, increasing the number of bid bands to 20 (x10 for load and x10 for generation).
  • Hybrid DC-coupled systems are allowed to register as scheduled, semi-scheduled, or both.
  • Aggregators of small units and existing small generation aggregators will be moved to the IRP category, allowing them to participate in the ancillary services market.

Somewhat more controversially for some, the rule change also clarified how storage systems will be treated in relation to non-energy costs and network charges:

  • Non-energy cost recovery would be based on a participant’s gross energy flows.
  • Use of two new data streams in non-energy cost recovery — Adjusted Sent Out Energy (ASOE) and Adjusted Consumed Energy (ACE).
  • A proposal to exempt pumped hydro and batteries from paying network charges was not accepted. This means that storage will continue to connect under a:
    • negotiated agreement at the transmission level
    • direct control service tariff or a storage tariff trial option, where offered, at the distribution level.

 

Initial reaction about the rule change

Much of the initial commentary on the rule change has focused on the network charges aspect of the announcement. The Clean Energy Council came out this morning with a media release arguing that the rule change places batteries and pumped hydro at a disadvantage to coal and gas. Here they stated that the determination “will result in consumers paying twice for network charges – first through higher electricity prices and again through standard network charges.”

On Tuesday, Giles Parkinson of RenewEconomy posted about the then-upcoming announcement in his article New network fees could “kill the viability” of battery and pumped hydro storage. He wrote “Battery operators say it is still difficult to make significant returns from arbitrage, or time-shifting wind and solar output from periods of low demand and low prices, to periods of high demand and higher prices”, adding “the technology needs market volatility, but its returns will be eaten away with the imposition of new network fees.”

 


About the Author

Dan Lee
Dan Lee first started at Global-Roam in June 2013. He has departed (and returned) for a couple of stints overseas in that time, but rejoined our team permanently in late 2019. More recently, Dan's focus has been on growing his understanding of the market and developing his analytical capabilities. He is currently enrolled in the Master of Sustainable Energy program at the University of Queensland.

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