Five-minute settlement bidding service testing opens to industry

2 min

Electricity generators across the National Electricity Market (NEM) can now begin testing AEMO’s new 5-minute bidding service. This marks a major milestone in delivering the IT system changes required to enable 5-Minute Settlements (5MS) from 1 October 2020.

Reducing the 30-minute wholesale electricity spot market settlement period to five minutes will provide a better price signal for investment in faster response technologies, such as batteries and gas peaking generators.  

In 2017, the Australian Energy Market Commission (AEMC) approved a rule change to introduce 5MS and, in 2018, Global Settlements (GS). These are important market reforms reflecting the evolving energy system, which has undergone significant change in recent years. This change includes the entry of smaller market entrants such as solar and wind farms, along with network batteries.

The NEM has five operating network batteries with a combined storage capacity of 260 megawatts, and more than 6 gigawatts in the planning pipeline, including the recently announced Victorian Big Battery. For a brief overview of all things batteries check out our podcast on the subject.

To implement the 5MS and the GS rule changes, AEMO established the 5MS Program, comprising the following workstreams:

  • Procedures: to define the required changes to market procedures (this work is complete).

  • Systems: to design, develop, test, and implement changes to AEMO’s market systems.

  • Readiness: to coordinate, assist, and prepare AEMO and the industry for the transition. 

For further information about the program please visit the Program Information and Fact Sheets page.

Most recently, AEMO has been preparing for the industry readiness phase through its 5MS Working Groups.

Industry testing will now progress in AEMO’s pre-production environment, providing an end-to-end NEM environment. From Monday 30 November, participants have been able to access the new environment to experience first-hand the functionality of the five-minute bidding service.

Participants will be able to test the 5MS retail and settlements solution in AEMO’s pre-production environment from February 2021. Market Trials of the full 5-minute capability will commence in July 2021 in the lead up to the commencement of 5-minute Settlement on 1 October 2021

AEMO will deploy the required systems changes into the Production environment in March and April 2021, which will allow market participants to begin bidding and submitting meter reads at five-minute intervals if they so choose. However, five-minute bids must be submitted with identical values within each 30-minute period, essentially emulating a 30-minute bid. 

During this 'transition period', the market will continue to be settled at 30-minute intervals, prior to the switch to 5MS scheduled for 1 October 2021.

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.

More information on 5MS including the bidding transition arrangements through to market commencement on 1 October 2021 is available on the 5MS website .

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