Today, the Australian Energy Market Commission (AEMC) announced its decision to defer the Five-Minute Settlement (5MS) and Global Settlement (GS) commencement dates to 1 October 2021 and 1 May 2022, respectively.
In its final determination, the AEMC stated that a three-month delay balances the capacity constraints placed on the industry by COVID-19 against the additional costs and deferred benefits associated with a longer delay to the commencement of the respective rules.
In 2017, AEMC approved the introduction of 5MS and GS, which is based on reducing the wholesale electricity spot market settlement period from 30 minutes to five minutes. This change aims to provide a better price signal for investment in fast response technologies (e.g. batteries, gas peaking generation) and to enable more efficient bidding, operational decisions and investments, aligned to dispatch and financial settlement periods.
To implement the AEMC rule changes, AEMO established a program to define the required changes to market procedures, design, test, and implement changes to its market systems, and to coordinate, assist and prepare the industry for the transition.
AEMO Managing Director and CEO, Audrey Zibelman, said: “AEMO proposed a delay to the implementation of five-minute settlement after hearing concerns from industry that the existing implementation timeline may create operational risk and impede their ability to effectively deal with COVID-19.
“We welcome today’s AEMC decision, which will ease pressure on companies as they manage outages and prepare for the coming summer. I am aware some market participants remain concerned about implementation costs.
“AEMO will continue to work with the industry to identify lower-cost software solutions and to minimise overall implementation costs, to help ensure the consumer benefits of these reforms are fully realised,” she said.
AEMO is committed to meeting the original dates it set for IT systems development and deployment, allowing market participants to progress implementation preparations and system testing ahead of the new go live dates.
Following this, AEMO’s program will then move to the transition period where the focus will be on industry readiness, including testing and market trials, prior to 5MS commencement in October 2021 and GS in May 2022.
The timeline below provides a high-level view of the key program milestones, taking into account the AEMC's new rule change dates.
Moving forward, AEMO has scheduled a forum with its 5MS
Working Group members, including generators, network businesses, energy
retailers and meter data providers, on 16 July 2020 to plan and align industry
readiness activities with the new rule change dates.
AEMO is hosting a webinar 10am-12pm (AEST) Friday 31 July on Five Minute Settlement (5MS) and Global Settlement to provide an update on the program’s progress, industry readiness plans and other key topics. Email 5MS@aemo.com.au to register.
For information about AMEO’s 5MS program, please visit the 5MS