The Australian Energy Market Operator (AEMO) today confirmed that the National Electricity Market (NEM) is ready to introduce Five-Minute Settlement (5MS) on 1 October 2021, in accordance with the rule.
The Australian Energy Market Commission (AEMC) will meet mid-September to discuss AEMO’s recommendation, and any industry feedback submissions, and make the final determination.
In 2017, the AEMC approved the introduction of 5MS, with AEMO responsible for updating market procedures, designing and testing systems, and coordinating an industry readiness program.
In essence, 5MS will shift the current 30-minute wholesale electricity spot market settlement period to five-minutes, providing a better price signal for investment in faster response technologies, such as batteries and gas peaking generators.
This involves changes to metering, settlement and prudentials, and bidding processes, as well as electricity retail and wholesale market systems. Click here to learn more.
AEMO’s Chief Market Services Officer, Violette Mouchaileh, said: “This is an important market reform that reflects the evolving energy system and an initiative that aligns very closely to AEMO’s priority areas as we navigate the energy future to the benefit of the market and all consumers.
“The extensive stakeholder collaboration has been valuable for the decision-making process and program outcomes, and essential for market readiness.
“Informed by, and completed in consultation with, market participants, AEMO’s comprehensive risk and readiness assessment measured essential criteria required for rule commencement – concluding that the NEM is on track for market start in October,” she said.
Some risks to successful operation of the five-minute market were noted as part of the readiness assessment and mitigations and contingency plans for these risks have been identified.
October 2021 will also see the soft start of Global Settlement (GS), a framework for the settlement of the wholesale electricity market. This aligns the development of systems and procedures for both changes, reducing implementation costs. GS will fully commence on 1 May 2022.
For more information about the upcoming rule commencement and the 5MS program, visit our dedicated webpage.