Australian electricity and gas markets - September 2022 update
04 October 2022
04 October 2022
Following the release of the Queensland Energy and Jobs Plan, we are very pleased to be able to offer tailored workshops on any key aspects of the plan, including:
The NSW Long Term Energy Service Agreement (LTESA) tender process opened today. To assist you in the preparation of your bid, we would be very happy to offer a presentation to you on the LTESA / access right auction and share some insights we have based on our review of the tender materials, including the long form LTESAs, and similar government-run auctions we have assisted clients on in the past.
The NSW LTESA tender process opened today which marks the first of a series of biannual tenders which are intended to replace retiring coal-fired power stations with wind, solar and storage over the next 10 years.
The indicative size of the inaugural tender is 2500 GWh of annual generation and 600 MW of long-duration storage. Successful tenderers will be offered contracts of up to:
You can find the LTESA tender pack here.
The Australian Energy Market Commission (AEMC) released its final determination and rule in relation to the Primary frequency response incentive arrangements rule change on 8 September. The final rule intends to support the control of power system frequency and incentivise plant behaviour in order to reduce the overall cost of frequency regulation during normal operation. The key elements of the final rule include:
The new frequency performance payments process will commence on 8 June 2025 and the new reporting obligations will commence from 8 June 2025 for AER and from 8 September 2022 for AEMO.
The AEMC initiated consultation on the potential for establishing a new market for essential system services to support the power system through the energy transition on 21 September in response to the Operational Security mechanism rule change initiated by Hydro Tasmania and Delta Electricity. Stakeholders have been invited to provide submissions on the draft rules until 17 November 2022.
The AEMC published a directions paper on 29 September in relation to the Amending the administered price cap rule change requested by Alinta Energy. As part of the directions paper, the AEMC proposes an increase in the level of the Administered Price Cap (APC) from $300/MWh to $600/MWh. Noting that this figure is higher than the $500/MWh figure recommended by the AEMC's Reliability Panel (see below), the AEMC considered that the figure may be justified in the near term due to a greater likelihood of gas prices reaching, and potentially exceeding, the gas APC. Stakeholders have been invited to make submissions on the directions paper until 13 October 2022. The AEMC has extended the date it will deliver its final determination for the rule change to 17 November to allow for more extensive stakeholder consultation due to the complexity of issues raised by the rule change request.
The AEMC published a final rule and determination in response to the Protecting customers affected by family violence rule change on 15 September. The final rule amends the National Energy Retail Rules (NERR) to introduce new measures which are intended to protect customers experiencing family violence. The final rule will commence on 1 May 2023.
The AEMC published a final rule and determination in relation to the DWGM distribution connected facilities rule change on 8 September 2022. The final rule amends the National Gas Rules (NGR) to allow distribution connected facilities to participate in the Victorian Declared Wholesale Gas Market (DWGM). This will allow these facilities to be able to supply natural gas, low-level hydrogen blended gas, biomethane and other renewable gases in the DWGM.
The Queensland Government released the new Queensland Energy and Jobs Plan on 28 September 2022 which sets out the Queensland Government's plan to deliver its new target of 70% renewable energy by 2032 and 80% by 2035. The Government's Plan outlines a number of key investments to deliver its new renewable energy target including:
For more information on the Queensland Energy and Jobs Plan see out recent energy alert here.
The AEMC released its final report and accompanying proposed draft rule changes to the NGR and NERR on 8 September 2022 as part of the market review into extending the regulatory frameworks to hydrogen and renewable gas. The AEMC has recommended to Energy Ministers that changes be made to the national gas and retail regulatory frameworks to enable the natural gas sector to use hydrogen and renewable gas to support Australia's emissions reduction plans. Stakeholders have been invited to provide submissions on the rule drafting until 13 October 2022.
The AEMC published a draft report on 20 September 2022 as part of Stage 3 of the Transmission Planning and Investment Review on 22 September. Stage 3 of the review is focused on issues relating to the planning and delivery of transmission infrastructure that are of considerable complexity and/or are longer-term reforms. As part of the review, the AEMC is seeking feedback on the following potential economic assessment models for major projects:
Stakeholders have been invited to provide submissions on these models and other elements of the draft report until 3 November 2022.
The AEMC initiated a market review into consumer energy resources technical standards on 29 September. The review is intended to investigate compliance with mandatory technical standards by Consumer Energy Resources (CER) such as solar PV, battery storage systems and electric vehicles. Stakeholders have been invited to make submissions on the consultation paper until 3 November 2022.
The AEMC published the final report and revised guidelines on 29 September as part of the market review of the guidelines for identifying reviewable operating incidents. The guidelines are used by AEMO to determine when a major event that impacts the security of the power system is deemed serious enough to be considered a 'reviewable operating incident' which AEMO is required to investigate and publicly report on.
The Australian Energy Regulator (AER) released its State of the Energy Market 2022 report on 29 September alongside the Energy Security Board's (ESB) annual Health of the National Electricity Market report. The reports look back on the energy market over the past year, particularly, the persistent high wholesale gas and electricity prices and the unprecedented suspension of the entire wholesale electricity spot market in June. While the AER and ESB expect to see continued pressure on electricity prices as high inflation and the rising cost of capital impacts the cost of electricity network investments, AER and ESB expect to see net benefits and improved affordability in the long term from the energy transition.
The AEMC's Reliability Panel published its final report for the 2022 Reliability Standard and Settings Review on 1 September. The Panel made the following recommendations for the reliability standards and settings needed between the period of 1 July 2025 to 30 June 2028:
The Panel is required to submit rule changes to the AEMC in relation to these and further recommended changes.
Click here to see our latest Energy Alerts, as part of our Energy Alert Series.
Authors: Paul Newman, Partner; Andre Dauwalder, Senior Associate; Harriet Curran, Lawyer.
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.