WEM Market
5 Minutes

Non Co-Optimized Essential System Services in the WEM

Essential system services (ESS), sometimes called Ancillary Services, help keep the electricity grid in a safe, reliable, and secure operating state.

But what might be 'non co-optimized' about them? We ideally want to have co-optimized dispatch of market services. So, for example, in the NEM market participants bid/offer energy and FCAS (frequency control ancillary services) together, and then AMEO, the system operator, calculates the optimal dispatch of all services taking into account offer prices and transmission constraints.

The WEM market is being reformed and when the new market starts in October 2023, market participants will also be able to offer energy and a number of frequency control essential system services (FCESS) for co-optimized dispatch. These FCESS services include Regulation, Contingency Reserve, and a Rate of Change of Frequency (ROCOF) Control Service.

But not all ESS can be co-optimized, and not all of the services required to maintain the safety, reliability, and security of the electricity grid can be known in advanced. Enter Non Co-Optimized Essential System Services (NCESS).

The WEM recently adopted new market rules to enable NCESS. Under these rules AEMO, Western Power, and the Co-Ordinator of Energy can all propose new NCESS (the Co-Ordinator of Energy is a special administrative role supporting the Energy Minister with responsibility for planning and co-ordinating the delivery of energy in Western Australia).

New Services for the WEM

New Reliability Services have recently been announced under the NCESS Framework because AEMO identified two material system risks that required a targeted response.

Firstly, they identified a Peak Demand risk.

This risk is due to fuel supply uncertainty (WA's coal supply issues have been widely reported) and a forecasted lack of new capacity to replace known facility retirements (again this generally relates to coal). The Peak Demand Service is similar to the RERT function in the NEM (which is also 'non co-optimized'). AEMO has forecast a shortfall of up to 830MW that will need to be covered by this service, which is a lot considering the size of the WA system.

Secondly, they identified a Minimum Demand risk. Traditionally system planners have been concerned with peak demand issues but WA has some special challenges.

South Australia and Western Australia have the highest penetrations of roof-top solar in the world. But WA has an additional challenge. It is the only Gigawatt-scale system with very high rates of roof-top solar that has and no interconnection with other transmission systems. When South Australia 'islands' due to transmission issues, it makes the news and there can be widespread black outs, but Western Australia is always islanded.

This is a problem because when roof-top solar output is high then operational demand on the system is low (customers are 'self-consuming'), which makes it difficult to schedule enough traditional synchronous generation to maintain system security.

While WA has a new system for managing distributed generation, which enables AEMO and Western Power to curtail roof-top solar systems when there are system security issues, adding load to the system so syncronous generators can continue to operate and provide system strength. But there isn't yet capacity in this distributed generation system to fully address the risks.

As a result AEMO has sought to procure two services:

  • A Peak Demand Service with capability to increase injection or decrease withdrawal from the system
  • A Minimum Demand Service with a capability to increase withdrawal or decrease injection form the system

As these are 'non co-optimized' services they will be procured and dispatched separately from other market services. Market participants who have tendered to provide these service will need to make capacity available for AEMO to dispatch in set time-windows over the course of the year: middle of the day for the Minimum Demand Service and early evening for the Peak Demand Service.

The Coordinator of Energy has now issued their decision supporting these two services, which will help maintain the security of the SWIS (albeit with increased costs for customers).

These services will also create new pools of value for owners of flexible energy resources, like flexible load, dispatchable renewable generation, and battery and other forms of energy storage - all resources that can be modelled in Gridcog, because the WEM is one of the markets we support.

Fabian Le Gay Brereton
Chief Executive Officer & Co-Founder
December 18, 2022
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