Fact sheet: Explaining electricity reserve levels

3 min

Each year, AEMO works with the government and industry to secure adequate supply for the network and prepare for the summer ahead.

AEMO has recently published its 2020-2021 Summer Readiness Plan which highlights the plans and actions both AEMO, the industry and government jurisdictions have taken to prepare Australia’s power system for the summer months.

The plan focuses on having appropriate resources available for AEMO, as the system operator, to call on to ensure supply is adequate to meet consumers’ energy requirements and power system security can be maintained at all times, managing frequency, voltage, system strength and inertia.

However, unplanned events can impact available supply, which may cause an increased risk of Lack of Reserve (LOR) conditions. This includes high demand, extreme weather events, natural disasters, along with generation outages and faults on the transmission network. 

As the national energy market operator, it is AEMO’s role to meet energy reliability standards for all Australians. 

We do this proactively by establishing a number of processes and arrangement to mitigate risk to energy supply during high demand conditions. 

This includes issuing LOR industry notices to encourage increased electricity generation to minimise the risk of limited reserves causing physical damage to parts of the power system and long-term outages to residents and businesses.

Here’s how it works:

The NEM is in a more positive supply-demand position heading into the 2020/21 summer compared to 2019, with no supply shortfalls in excess of the reliability standard projected.

Up to 3,400 megawatts (MW) of new wind and solar generation capacity has been added since last summer, and generation units are expected to complete their planned outages before Christmas.

As a precautionary measure, AEMO has received expressions of interest for more than 1,900 MW of additional reserves through the Reliability and Emergency Reserve Trader (RERT) panel function. These are used only if the market does not respond with enough supply or demand resources to meet the reliability standard or manage power system security incidents, such as the loss of multiple generation or transmission assets

 The panel agreements allow AEMO to manage the risk of not meeting the reliability standard, without committing to reserve contracts or availability payments until they are needed.

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