AEMC publishes draft rule change for Semi-Scheduled generators


It was quite a busy day today (Thu 19th Nov) in the NEM in terms of changes relating to COVID, to summer, and to the ongoing energy transition.

I’ve already noted about the step-change reduction in South Australian demand that might result from the mandatory ‘stay at home’ orders for all but essential workers

Amongst the other updates, there was also this AEMC notice that they’d issue a Draft Rule in relation to Semi-Scheduled generators:

2020-11-19-AEMC-DraftRule-SemiSched

The key dates are as follows:

Thu 19th Nov 2020 (today) = draft rule

Thu 14th Jan 2021 = submissions due

Thu 25th Feb 2021 = final determination

WHEN? = takes effect?

Given we’d contributed some articles on WattClarity before about this (and even a very rare formal submission from us) we thought it was worth highlighting this here:

 

(A) Background to the need to change:

Here’s a brief tabulated history of what’s happened at the AER, and with the AEMC (and with us):

Thu 28th May 2020

As noted on WattClarity a couple days later, we noticed a short notice from the AER alerting NEM participants and others to the request they’d received from the COAG Energy Council to develop two rule change proposals each focused on some perceived challenges with the operations of Semi-Scheduled generators:

Rule Change Proposal #1 = Continuous Disclosure

Rule Change Proposal #2 = Following Dispatch Targets

It will be important to come back to this request to understand the extent to which they have been addressed in what the AEMC is considering…

Wednesday 24th June 2020

We also notified WattClarity readers on Sunday 28th June of the publication of the AER Issues Paper.

Intervening period

In the period that elapsed between the publication of the AER Issues paper and the submission of the requested rule change to the AEMC, there were a number of developments worth highlighting here:

1)  On 9th July, triggered by an association with Elton’s song spoke about ‘Too Low for Zero’ as a parable for the AER Issues Paper?.  The three paradigms noted there are worth understanding.

2)  On 17th July, Marcelle Gannon penned some thoughts under the title ‘Semi-scheduled generation–what are the real issues?’ to seek to focus discussions on what really mattered.

3)  On 24th July I contributed some thoughts in the article ‘Striving to understand the underlying challenges with Semi-Scheduled generators (re AER Issues Paper)’

4)  We even, in a very rare event, made a formal submission to the AER processes (hence the email on 28th Oct from the AEMC, being in their database of interested parties – though I suspect the ‘interested parties’ category is broader than that).

… and in between all of this, a number of other interesting news articles and other publications were tagged into our Asset Catalog (emerging out of the earlier Generator Catalog) as developments and thoughts relevant to the Semi-Scheduled generators.

Wednesday 30th September 2020

On Wednesday 30th September we noted that the ‘AER releases proposed rule change for Semi-Scheduled generators and dispatch instructions.

Thursday 15th October 2020

The AEMC approved the fast-track process. We missed that, at the time (a few other distractions, like 13th October in QLD).

Wednesday 28th October 2020

We noted the receipt of an email on 28th October (informing us that the AEMC would ‘Fast Track’ the Rule Change).

Thursday 19th November 2020

Hence (three weeks later) we see this draft rule change … outlined briefly below.

Thursday 14th January 2021

Only 8 weeks from now is when submissions are due.

 

(B)  Quick notes of the AEMC’s draft Rule Change

One of our team quickly scanned the AEMC documentation and has the following comments for you…

B1)  Summary of the Rule Change

Summary of the rule change:
–    A non-semi-dispatch interval has a target while a semi-dispatch interval has a target and cap (similar concept to now)
–    The semi-scheduled generator is obliged to meet the target except for variations in “resource availability” (up/down for non-semi-dispatch, down only for semi-dispatch)
–    “Resource” is defined as “The intermittent energy source (such as wind or solar radiation) that is converted by a semi-scheduled generating unit into energy.”

The rule change is justified as a proportionate response to a loophole in the existing rules – which the AEMC sees as giving a technology-specific advantage:

“Current arrangements are not technology neutral – The Commission considers current arrangements are not technology neutral. The ability to withdraw generation for economic reasons without re-bidding confers a competitive advantage on semi-scheduled generators given their registration category.”

B2)  How it would be enforced

As for how it would be enforced (i.e. by the AER), the rules don’t make any direct provisions for this, but section 5.3 (from p35) makes it clear what the AER will do:

“5.3: Other options assessed by the AER

… (from p37) Require a self reported ‘bonafide reason’ for the deviation – In their submissions to the issues paper, a number of stakeholders cited arrangements in New Zealand. These require intermittent generators to self report a ‘bonafide reason’ for a significant deviation from dispatch targets. Stakeholders considered this to be a simpler approach to addressing the challenge of negative price curtailment than the options put forward by the AER in its issues paper.

The AER was not supportive of this approach. It considered the ‘self reporting’ model presented a range of monitoring and compliance issues. The AER preferred a discretionary AER-initiated ‘please explain’ method linked to clear rule obligations. The AER considers this approach allows, when questioned, semi-scheduled generators to link sudden changes in their output to any relevant feature not apparent from data. For example unexpected high speed cut out or run back, temperature effects or other technical protection systems not related to the energy price.”

B3)  Slow ramp up from pause

And on the topic of deviations below target due to windfarms slowly ramping up from pause (something Marcelle raised on 17 July 2020), the draft determination quoted Tilt Renewables’ submission and responded – and also reinforcing that deviations for frequency response are ok (already in 4.9.8(a1), mentioned elsewhere in the paper):

“5.5.3. Requirement to follow dispatch instructions subject to natural resource availability

 … (from p42) Flexibility available to semi-scheduled generators to deviate from dispatch targets is sufficient – Tilt Renewables, in its submission to the AER’s update paper, was concerned that limiting flexibility to deviate from dispatch targets to natural resource availability would not provide sufficient flexibility to account for technical reasons for deviating from dispatch targets. Tilt Renewables noted several technical reasons that may require a semi-scheduled generator to be off its target in its submission to the AER’s update paper; for instance wind turbine active power recovery times following a turbine pause, and ramping down for a network outage.

The Commission notes this concern but identifies existing arrangements in the Rules that provide additional flexibility to address Tilt’s concerns. Flexibility for semi-scheduled generators to deviate from their dispatch targets is not solely limited to natural resource availability. Under the rules, a semi-scheduled generator is not taken to have failed to comply with a dispatch instruction if it is operating in frequency response mode.  A semi-scheduled generator is also able to update its availability in its offer to reflect individual turbine outages, whether from overspeed protection or any other reason.

It should be noted that the general obligation to comply with dispatch instructions also has a technical and safety exception. Clause 4.9.8(a) of the NER does not require registered participants to follow dispatch instructions if it materially risks damaging equipment or is a hazard to public safety. That provision applies in cases where a plant is forced offline for a technical reason. The AER also has discretion to account for unavoidable technical issues in how it enforces compliance under the rules. Further information is available in the AER’s compliance and enforcement policy.”

B4)  More?!

There’s bound to be more in there, but that’s what we saw in a brief scan this afternoon…

 

(C)  Why are we so interested in this?

There are several reasons … some of which are as follows:

C1)  Technology will be a big part of the future

First and foremost, the type of generation technology (i.e. wind and solar) currently facilitated by the Semi-Scheduled category for participation in the NEM would seem almost certainly to be a large part of the way in which this energy transition will continue to unfold.

This will be together with some form of dispatchable capacity and also a fair mix of storage (the exact makeup of which, and how it would be dispatched, being a lot less certain).

C2)  The category is not without its challenges

Leaving aside the technology itself, we’ve been puzzling for a while about some emerging challenges we see the market/system grappling with because of the way in which that technology has been incentivised into the market.

We wrote, for instance, about the challenges that we saw had been imposed on the market by a mindset focused on ‘Anytime/Anywhere Energy’ in the Generator Report Card 2018:

2018GeneratorReportCard-Part2-Theme5-Schism

This was in Theme 5 within Part 2 of the 180-page analytical component in the GRC2018.  It’s since been discussed in articles on WattClarity (such as on the extent to which ‘we’ve been killing new entrants with kindness’).

The way in which the Semi-Scheduled category currently works is part of that overall environment.  These proposed changes would go some way to addressing these challenges.

C3)  We’re serving an increasing number of Semi-Scheduled generators

Through our ez2view software, and also in other ways, we’re finding we’re being called on to serve an increasing number of Semi-Scheduled generators … with a particular spike seen in recent times due to a number of factors:

One Factor (there are others) is a realisation that ‘set and forget’ is no longer a real option as the level of complexity – and risk – in the NEM increases (probably never really was, but that’s another story).

C4)  Do you know of others who can help us?

If you know of others who can help us in all of this, please let us know (or point them our way)?

About the Author

Paul McArdle
One of three founders of Global-Roam back in 2000, Paul has been CEO of the company since that time. As an author on WattClarity, Paul's focus has been to help make the electricity market more understandable.

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