Market Ancillary Services and Small Generation Aggregators – Rule Change
The landscape of the energy industry is experiencing rapid changes as work continues towards achieving Australia’s renewable energy targets. The Australian Energy Market Commission (AEMC) has finalised a rule change that will facilitate this transition by integrating energy storage and hybrid systems into the National Electricity Market (NEM) and the first changes have just come into effect.
AT A GLANCE
|COMPLETE! 31 March 2023: Aggregators of small generating and storage units may choose to provide market ancillary services
Services that are essential to the management of power system security, facilitate orderly trading in electricity and ensure that electricity supplies are of acceptable quality. These services are managed by the Australian Energy Market Operator (AEMO) to maintain standards for frequency, voltage, network loading, and system restart processes.
|COMPLETE! 9 August 2023: Hybrid systems may use aggregate dispatch conformance|
|3 June 2024: Final rule implementation and introduction of the Integrated Resource Provider participant category|
Bi-directional flow? Hybrid systems?
In times past, energy usually flowed in one direction – a generator
Units with bi-directional flows are units capable of both generating energy and consuming energy. While not limited to storage, this term does include batteries – typically batteries do not ‘create’ energy, but the discharge of energy stored in a battery is still categorised as generation.
Hybrid systems are systems in which multiple types of generation, batteries or load exist behind the same power grid connection point. For example, a hybrid system may include solar generation and a battery behind a single connection point, or a combination wind and solar farm. This term refers to grid-scale facilities and not to small customers with solar panels and batteries, or the aggregation of those customers (such as in a virtual power plant
In order to buy and sell energy into the NEM, registration is required as a market participant. There are different registration categories, and which category might be required is dependent on the intended activities in the NEM. At the moment without the rule changes determined by the AEMC, hybrid systems have to register as several different kinds of market participant categories in order to participate in the NEM which can be a complex process.
This rule change – called the Integrating Energy Storage Systems (IESS) rule change – focuses on introducing flexibility into the National Electricity Rules
Some things have already changed
On 31 March 2023, an interim rule came into effect that made a few changes in preparation for the full rule implementation next year.
Small Generation Aggregators may now choose to provide contingency market ancillary services
Small Generation Aggregators are market participants that supply energy aggregated from multiple generation sources. These generation sources must be exempt from registering as a generator and are usually under 5MW each.
Before this change, aggregated small generation units were unable to participate in any ancillary markets. This move is in preparation for the retirement of the Small Generation Aggregator
The interim rule change has also adjusted how hybrid systems may be managed in AEMO’s dispatch processes. As of 9 August 2023, when registering as a market participant, eligible hybrid systems may choose to be managed as a whole system through the dispatch process, which means that the system’s conformance compliance requirements would be for the whole hybrid system. Previously, conformance requirements were set for individual generation and loads (for example, conformance requirements were different for solar generation and wind generation in a hybrid system, even at the same connection point in the power grid).
Full implementation of the IESS rule change will commence on 3 June 2024 and will include the introduction of the much-anticipated Integrated Resource Provider (IRP) market registration category. The IRP category will provide hybrid systems and bi-directional units with a fit-for-purpose market registration category that accommodates different generation capabilities and bi-directional flows.
The rule change is also impacting the Small Generation Aggregator registration category. From mid-2024, all market participants registered as Small Generation Aggregators will be transferred to the IRP registration and will be given the label of Small Resource Aggregator. This is the mechanism that has allowed for Small Generation Aggregators to participate in ancillary services.
Some registered market participants must report to AEMO about scheduled generation or consumption of energy. This allows logistical planning of energy flows through the NEM and energy dispatching processes. The IESS rule will address some of the barriers innovative systems have been facing, including clearer obligations for the scheduling of generation and load of hybrid systems and allowing eligible hybrid systems to choose scheduling classifications that best suit the system.