Powering progress Clean Energy Councils rule change request
25 May 2023
25 May 2023
In 2020, the Clean Energy Council (CEC) and the Australian Energy Market Operator (AEMO) brought together industry stakeholders to form the Connections Reform Initiative (CRI), which aims to address systemic concerns involving the grid connection process. The CRI identified 11 recommendations in a Connections Reform Roadmap.
Off the back of these recommendations, on 17 May 2023 the CEC submitted the Investor Certainty in the 'R1' Process Rule Change Request to the Australian Energy Market Commission (AEMC). This rule change is the first step to address the CRI's recommended reforms to the R1 connection process.
The rule change request proposes to amend the R1 process for assessing a generator's ability to meet performance standards by clarifying roles, timeframes and obligations, and introducing new standardised "types" that allow applications to more flexibly and efficiently address issues identified in the process.
CEC intends that the rule change request will:
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As part of its review, the CRI has identified that the National Electricity Rules (NER) are currently unclear on the requirements, process, steps and responsibilities associated with assessing and approving the performance of a generator at the R1 stage of the connection process. The rule change addresses this issue by improving the efficiency, certainty and transparency of the R1 connection process.
By improving connection timeframes, the rule change will speed up entry of new generators and in turn increase competition, reduce wholesale prices and improve system reliability and security for consumers. Further, the CEC intends the rule change to reduce the barriers to entry for new generation by removing the uncertainty in the R1 process and the associated investment risk and costs.
The R1 process is a key stage of the connection process where an "R1 model" is assessed against original modelling in the applicant's agreed access standards. R1 models are more detailed then those at earlier stages and can produce technical performance data different to that which underpins the agreed performance standards.
In such cases, it is necessary to ascertain whether the applicant can comply with the agreed performance standards. The current process involves a three-way discussion between the applicant, the relevant Network Service Provider (NSP) and AEMO.
The CRI working group has identified there is very little guidance provided around the process for verifying compliance with the performance standards in R1, including how decisions are made, by whom they are made and in what timeframe they must be made.
The R1 process is inflexible, as AEMO cannot provide conditional approval for the R1 package or make minor downwards adjustments to performance standards and R1 decisions are not easily reviewable. Further, the R1 process disadvantages generators, which are held responsible under the current process for external system changes which affect their R1 modelling even where such changes are outside their control.
These issues reduce the overall efficiency of the market, leading to poor outcomes for new entrants, NSPs and AEMO, while creating uncertainty that can cause higher costs for consumers.
The CEC notes that the issues with the existing rules have the following impacts:
The CEC's rule change involves the following key elements:
Under the rule change, the applicant will initiate the R1 process by providing an initial self-assessment. Where any issues are identified, the applicant will consider the materiality of the impact on the system and mitigating actions, whether the issues can be resolved at a later stage in the connection process, and whether issues are due to changes in the external power system.
The rule change creates a process for issues identified by the applicant at the initiation stage to be resolved efficiently. This will be actioned through a defined framework of proposed solutions proportionate to the type of system security issues identified under the R1 process, identified in the table below:
Situation identified from R1 modelling
|Type 0 – R1 model consistent with performance standards||Applicant receives approval for the R1 from the NSP.|
|Type 1 – R1 deviations within materiality threshold||Revise performance standards compliance to be consistent with modelling, applicant then receives approval.|
|Type 2 – R1 identifies external security issues for TNSP to resolve||TNSP commences security procurement, applicant then receives approval.|
|Type 3 – R1 model identifies issues that can be resolved during commissioning||Commissioning plan includes conditional actions for applicant, applicant then receives approval.|
|Type 4 – R1 model identifies changes needed to plant design||Applicant revises plant design to meet performance standards, applicant then receives approval.|
These types introduce a concept of materiality, which allows parties a level of flexibility to resolve issues based on the size, location, impact of the issue and technology type.
The rule change clarifies an applicant's obligations and timeframes, including:
The AEMC will now publish the CEC's rule change request on its website as a pending rule change. It will then proceed to formally initiate the rule change process by publishing:
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Authors: Andre Dauwalder, Counsel; Alexandria Brown, Graduate; and Murray Rissik, Paralegal.