Frequency Performance Payments project
Background
As the generation mix transforms and more renewable sources and batteries come on-line, it is increasingly important to provide frequency response to keep the electricity grid stable and control system frequency as close to 50Hz to keep the system secure.
On 8 September 2022, the Australian Energy Market Commission (AEMC) published the Primary frequency response incentive arrangements rule to address this.
AEMO established the Frequency Performance Payments (FPP) project under the NEM Reform Program to carry out the procedure and system changes arising from the rule and to support industry readiness for the changes.
Scope
AEMO uses Regulation Frequency Control and Ancillary Services (FCAS), to make relatively small adjustments to the supply and demand balance in the electricity system.
Under the current Causer Pays framework, electricity generators are assessed based on the relative unhelpfulness of their impact on the power system frequency. Causer Pays recovers Regulation FCAS costs from those electricity generators who have an overall negative impact on the power system, while those who do not have a negative impact avoid paying any costs.
The reform creates a system of positive and negative FPPs, which will give market participants information on their frequency performance and its dollar value (or cost). Under the new arrangements, generation units’ performance and five-minute Contribution Factors (CF) calculated for FPP will be used to allocate the recovery of Regulation FCAS costs. Ultimately, the rule is intended to incentivise plant behaviour that reduces the overall cost of frequency regulation in the National Electricity Market.
Timeline
Timing | Element | Summary |
---|---|---|
December 2024 to May 2025 |
Non-financial operation of new FPP systems |
Extended period of non-financial operation of the new FPP system to allow market participants to familiarise themselves with its operation. |
8 June 2025 |
Frequency Performance Payments Go Live |
Full rule commencement. |
Industry engagement
This initiative forms part of NEM Reform Program and market participants can get involved by visiting:
Procedure changes
The following procedures needed to change to implement the FPP project:
Implementation toolbox
The Implementation Toolbox is a central location for useful resources to help participants understand and prepare for the changes associated with the rule implementation.
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Planning
FPP implementation milestones and development timelines:
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Readiness
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18/11/2024
FPP-NFO Industry Go-live Plan - Final
743.86 KB -
15/10/2024
FPP-FO Industry Readiness Approach – Final
568.76 KB -
26/09/2024
FPP Non-Financial Operation Final Industry Test Plan
673.74 KB -
07/06/2024
AEMO FPP Dec 2024 Industry Test Strategy
759.34 KB -
29/02/2024
FPP Readiness & Go-Live Criteria (NFO)
394.43 KB -
25/01/2024
FPP Industry Readiness Approach Draft
595.9 KB
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Technical documentation
Available via AEMO’s Technical Specifications Portal
- EMMS – Technical Specification – Data Model v5.4 – November 2024
- EMMS – Technical Specification – Data Model v5.5 – April 2025
Educational resources
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General
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02/12/2024
AEMO NEM FPP Factor Calculation Guide
1.97 MB -
02/12/2024
AEMO Guide to Constraint Outcomes for FCAS Cost Recovery
587.5 KB -
08/12/2023
Frequency Performance Payments Fact Sheet - Overview
153.51 KB -
09/12/2024
Frequency Performance Payments - Frequently Asked Questions (AEMO FPP FAQs)
1013.96 KB -
08/12/2023
Fact Sheet – FPP calculations and participant outcomes
358.94 KB -
23/02/2024
Frequency Performance Payments (FPP) Stakeholder Webinar Presentation – 23 February 2024
1.87 MB -
14/11/2024
FPP Non-Financial Operation Information and Q&A session presentation – 8 November 2024
2.25 MB -
04/09/2023
Presentation: Pre-dispatch estimates related to the FCFP workshop
1.42 MB -
04/11/2022
Frequency Performance Payment worked example
51.2 KB
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Development of the Frequency Contribution Factors Procedure
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21/09/2022
FPP Fact Sheet
855.62 KB -
21/02/2023
Presentation: Frequency Contribution Factor Procedure – Technical Workshop 1
3.64 MB -
28/02/2023
Presentation: Frequency Contribution Factors Procedure – Stakeholder Technical Workshop 2 (Reporting)
721.02 KB -
15/02/2023
Presentation: Frequency Contribution Factors Procedure Consultation
3.02 MB -
04/11/2022
FCFP Consultation Briefing
1.35 MB -
19/09/2022
Presentation: Frequency Performance Payments Project (PFR Incentive Rule Change)
1.09 MB
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