The Coordinator of Energy (Coordinator) is conducting a review of the Essential System Services (ESS) Framework (the Review), incorporating:
- a review of the ESS Process and Standards under Section 3.15 of the Wholesale Electricity Market (WEM) Rules; and
- a review of the Supplementary Essential Systems Services Procurement Mechanism (SESSM) under clause 2.2D.(h).
The review of the ESS Process and Standards and the basis for setting the ESS requirements aims to assess whether the existing framework is effective to ensure power system security and reliability can be maintained as the energy transition continues.
There are three types of ESS in the WEM. However, only the Frequency Co-optimised Essential System Services (FCESS) are being considered as part of this Review.
Section 3.15 of the WEM Rules requires the Coordinator to complete the first review of the ESS Process and Standards within two and half years of new WEM commencement. This review can be carried out earlier if necessary. In this instance, the Review will be commenced early, due to:
- the transitional arrangements requiring all registered Facilities accredited for FCESS to offer their full accredited capability ending on the 1 April 2024;
- AEMO has not yet finalised several key procedures that support the ESS Framework, including the WEM Procedure relating the Low Reserve Conditions (describing how AEMO assesses the probability of accredited ESS providers being insufficient to meet the ESS Standards) and two WEM Procedures relating to the SESSM Trigger;
- there have been persistent shortfalls in available FCESS since the start of the new WEM, which have led to high FCESS costs; and
- the total costs of ESS, including FCESS Uplift costs, have increased substantially, driven by significant costs increases for all FCESS Market Services.1
An output of a review of the ESS Process and Standards, required under Section 3.15, is also a review of the processes and effectiveness of the SESSM if it was triggered during the ESS Standards review period.
While the SESSM has not yet been triggered, EPWA considers that it is appropriate to undertake a review of SESSM in conjunction with the review on the ESS Process and Standards to ensure that the core processes and design elements of the SESSM, including the relevant rule obligations are fit for purpose and would work as intended.
