AEMO mulls new rule that could make wholesale electricity market more battery-friendly

A proposed rule change that could accelerate the deployment of battery storage in Australia has been put into the slow lane, with a draft determination delayed by seven months.

The rule change, proposed by major energy user Sun Metals, calls for settlements on the wholesale electricity market to be made every 5 minutes, rather than every 30 minutes, so it can match the dispatch price interval.

Proponents and supporters say it will remove market distortion and increase competition, and reduce prices.

The proposal has been supported by other energy users, battery storage and software developers, and independent energy analysts. Even the Australian Energy Regulator accepts it could reduce prices by removing a market distortion, and the Australian Energy Market Operator sees no technical issues and says it won’t cost much to implement.

But the AEMC announced on Thursday that the draft ruling would not be made this week, as originally planned, but would instead by delayed until March 30 next year, with a final decision not likely before July 31, 2017.

“The extended timeframe will enable the AEMC to evaluate the complex issues raised in responses to the consultation paper and consider the implications of inter-related AEMC projects,” it said in a statement. “It will also allow additional consultation with a large number of interested stakeholders.”

AEMC said the rule change represents a fundamental change to the price calculation in the wholesale electricity market, and was being made against the background of a market transformation, driven by the increasing share of renewable energy.

It warned that if it does agree to a rule change,  a transition period may be necessary to manage impacts on IT systems and contractual positions for retailers, generators and the market operator.

© 2016 Solar Choice Pty Ltd

Giles Parkinson