Pricing methodology guidelines 2022 - System strength pricing

Sector: 
Segment: 
Status: 
Date initiated: 
22 March 2022
Date completed: 
25 August 2022
Effective date: 
25 August 2022
Contact: 
General enquiries - Pricing, General enquiries - Pricing AERPricing@aer.gov.au
AER reference: 
AER213736

Overview

On 21 October 2021, the Australian Energy Market Commission completed the “Efficient management of system strength on the power system” rule change. System strength is a critical service that supports inverter based resources, such as wind and solar generation, and batteries, as they become a key part of the generation mix in the National Electricity Market (NEM).

The rule change seeks a more forward looking, coordinated solution for the supply and demand of system strength in the NEM. A key aspect of this solution is providing connecting parties a choice between remediating their own system strength impact or paying the transmission network a charge for providing system strength services.

On 2 June 2022, we published the draft amendments to our transmission pricing methodology guidelines to include how to price system strength services in the NEM.

On 25 August 2022, we published the final pricing methodology guidelines and explanatory statement. We have modified the guidelines to specify:

  • the permitted methodologies for determining the system strength unit price, and
  • the principles for forecasting system strength revenues.

For previous amendments to our transmission pricing methodology guidelines, please see the Pricing methodology guidelines 2014 webpage.