The Australian Energy Regulator has ramped up penalties that may be applied to owners of power plants, no matter the technology, if they fail to refine bidding before dispatch.
The past half-decade has seen a rush of new generation connected to the NEM, with developers and owners willing to take risks that sometimes proved beyond them. A change by the Australian Energy Regulator on January 29 is another trap, where some generator penalties have increased a hundredfold, to $10 million or more for large companies and $500,000 for individuals.
To incur a fine, a generator must fail to respond immediately to a request from the Australian Energy Market Operator. It won’t be a concern for those who refine their bids – or rebid – if their expectations change about output during the hours preceding dispatch. But in a sector that hosts many new entrants, not everyone is that sophisticated.
The AER’s civil penalty change isn’t just about bidding and rebidding, says Overwatch Energy executive director James Tetlow, “this is also about control of the power stations and power system security.”
The operator, AEMO, seeks to match supply of electricity with demand. The stability and security of the power system rely on it. Operators of generating plants, be they solar, wind, coal, gas or whatever, are expected to deliver what they say they will deliver subject to variances in wind or irradiance. But generators, including variable renewable generators, must reduce their output if dispatched down by AEMO to ensure supply continues to match demand.
AEMO also requires that suppliers be contactable at all times, seven days a week, even if it’s the dead of night and their energy source is the sun. The operator expects every generator to “act like a power station”, Tetlow says, that can respond to its requests as it maintains system security.
Viewed from that angle, any power station that fails to keep its promise deserves to be put in line.
Not all owners and operators might understand their obligations, however. “There are a number of new entrants, more so in the solar sector, who don’t get this and still think they are farmers or real estate developers,” Tetlow says, whereas those with more experience are likelier to understand the national electricity rules, market volatility and how money can easily be lost.
The notion of being on-call at all times might come as a surprise to some plant operators, and that’s causing shudders at the AER and AEMO. “That’s the behaviour that they are most concerned about,” Tetlow says.
The operator accepts that any plant anywhere is free to make commercial decisions about whether it wants to generate, and no-one could blame the owner of a solar plant for not generating when prices are negative. If a plant is going to pull itself out of the market, however, AEMO wants it to follow the rules. “And the rules of the market, for those circumstances, require you to rebid.” To do otherwise is to jeopardise power system security.
Software is great at forecasting generating conditions and predicting output but it cannot answer a phone call from AEMO at 5am telling a solar plant owner to switch off inverters so that maintenance can be carried out on a transmission network.
“They not only need to be able to talk to [the owner-operator] but the person on the other end of the phone needs to understand what [AEMO is] saying,” he says. “Sadly, it’s a point that needs to be made.”
If the owner-operator can’t do what AEMO requires, then “in a practical sense” it does not have control over its power station. In a worst case scenario, a network service provider would be instructed by AEMO to disconnect that generator. “That’s the fallback, not the normal operational regime.” Solar farm owners, then, work around the clock – even if their investments don’t. They had better know the rules and penalties for not following them.
Tetlow says thinking about synchronous condensers (spinning machines that can provide services to the grid, among other things, but do not produce megawatts) may help owners understand the notion that a solar plant can be valuable to the grid whether it’s generating or not.