AEMO to request the AER make a reliability instrument after amendment of the RRO trigger approved

As part of the Energy Security Board's work on the interim reliability measures, it was recommended to the former Council of Australian Governments Energy Council that the Retailer Reliability Obligation (RRO) trigger be changed to align with the interim Reliability Measure (0.0006% expected unserved energy).

On 17 November 2020 Energy Ministers agreed to the proposed changes, which will come in to effect on 26 November 2020. The Australian Energy Market Operator (AEMO) must now use the interim reliability measure as the standard against which to forecast any reliability gap.

As stated in AEMO’s 2020 Electricity Statement of Opportunities, using the Interim Reliability Measure, it is forecasting a 154 MW reliability gap in New South Wales from 1 January to 29 February 2024. AEMO is therefore required to provide the Australian Energy Regulator (AER) with a reliability instrument request for the forecast gap in New South Wales. The AER must make its decision on the request by no later than 31 December 2020,  three years before the start of the forecast gap.

If the AER makes the reliability instrument, the RRO will begin. This puts liable entities on notice to enter into sufficient qualifying contracts to cover their share of a one-in-two year peak demand. A Market Liquidity Obligation (MLO) is also placed on certain generators to ensure there are contracts available.

All documents that form the reliability instrument request will be published on the AER website by 1 December 2020. This will start a consultation period for stakeholders to provide submissions on the request. Due to the short time in which the AER must make its decision, stakeholders will need to provide submissions by 7 December 2020. Further information on how stakeholders can provide submissions will be published with the reliability instrument request.

The AER will assess the instrument request in accordance with the Interim Reliability Instrument Guidelines.

 

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Issued date: 
20 November 2020
AER reference: 
AC 157/20