No change to current NEM reliability standards

The Reliability Panel has published the final report for its four-yearly ‘check in’ of the reliability standard and settings for the national electricity market (NEM).

The panel found the current reliability standard and settings should be extended to 2024.

These market-wide settings are an integral part of the NEM framework, which aims to get power to customers as cost-effectively as possible.

The settings and standard support efficient generation and operational decisions and provide an important ‘price envelope’ protecting market participants from exposure to excessive high prices.

The reliability standard is a trade-off between meeting the required level of reliable electricity supply and cost.

In simple terms, the current reliability standard requires sufficient generation and transmission interconnection to service 99.998 per cent of the community’s forecast annual demand.

In reviewing the standard and settings, thepanel modelled a range of different futures – including a world with more household battery storage systems and more wind generation.

It also factored in the current state of uncertainty in the market and how the market is transforming.

Reliability Panel chairman Dr Brian Spalding said the robust analysis undertaken by the panel found the settings will continue to achieve their purpose of signalling to the market the level of generation and demand response needed, while also supporting market integrity.

“Setting the reliability standard involves a trade-off between the prices consumers pay for electricity and the cost to consumers of not having electricity there when it’s needed,” Dr Spalding said.

“In doing this review, the panel was extremely cognisant of getting the balance right to avoid what some have called ‘gold plating’ with excess capacity built but not required for years.”

The panel noted that removing the difference between the current standard of 99.998 per cent of demand met and 100 per cent could require considerable additional investment in generation measured in the billions of dollars.