Your hearts must have the courage for the changing of the guards

Policy and regulation changes in the National Electricity Market continue to accelerate with around 26 active rule changes underway. This week we wanted to look at the quantitative impact of one of the most talked about issues in the NEM this year – System Strength. There are currently 3 rule changes dealing directly with system strength issues that will have profound impact on the way in which the electricity grid is managed in the coming decades:

  • Efficient management of system strength on the power system
  • Synchronous services markets
  • Capacity commitment mechanism for system security and reliability services

As well as the broader AEMC “Investigation into system strength frameworks in the NEM”, and the Energy Security Board’s Post 2025 Market Design work under the Essential System Services workstream.

Figure 1 looks the at top 100 constraints (by total $ magnitude) and I picked out those constraints that I considered to be the result of system strength issues (such as voltage control) under system normal conditions across the NEM for the last four years by state (the constraint data for 2020 is only up to June 2020 so in order to compare it to previous years we doubled the value).

Most significant is the huge increase in QLD constraints in the past year up by $420,000/MWh from 2019. This is due mostly to the constraints on Mount Emerald Wind Farm and Haughton Solar Farm resulting from system strength issues in Northern Queensland. We can expect that these constraints will only continue to increase and will likely overtake the much talked about wind system strength constraints in SA. These constraints are at their worst over the spring, which means they could be much larger than depicted here once the actual result come in. The constraint costs for SA, which have traditionally dominated the total NEM constraints are almost solely due do the wind generation limits, which have trended down recently.

The system strength issue in NSW that was ramping up in 2019 was predominantly due to the constraint invoked to avoid voltage collapse in South NSW resulting from the loss of the single biggest generator in VIC (or Basslink). This constraint has only bound 200 hours in the first 6 months, or 400hrs equivalent in 2020 compared to ~2,100 in 2019, 1,166 in 2018 and 1,808 in 2017. The lack of this constraint binding in 2020 may be in part due to the increase in generation in South NSW. However, as more generation comes online in the South NSW region in future years, we are likely to see a new constraint bind limiting the flow of generation east through Wagga Wagga.

Understanding the direction of system strength policy and regulation is key to ensuring that participants in the market are aware of potential impacts on projects as well as being able to identify areas of the grid that need support. To find out more join us on 18 our The future of the NEM: rule changes, policy and direction of the NEM training.