The reliability standard is the threshold used to determine whether there will be enough future capacity in the National Electricity Market (NEM) to meet demand. A breach of the standard (based on the LT and MT PASA forecasts that AEMO conducts) signals to investors that there will be a supply/demand imbalance.
Every four years the Reliability Panel will review the reliability standard and settings in the NEM.
The reliability standard is used to determine whether there is sufficient capacity within the NEM to meet demand.
It is defined as the proportion of expected unserved energy (USE – measured in GWh) relative to the total demand in a region over a financial year. The standard is currently set at 0.002% – this means that 99.998% of forecast annual customer demand is to be met.
It is worth noting that:
- The standard only considers the impact of credible contingencies (e.g. generators, interconnectors, transmission)
- Distribution reliability isn’t counted
- It’s possible that a combination of weather events in a particular year could lead to a higher than expected level of load shedding as the standard is defined in terms of the maximum expected unserved energy
The reliability settings are:
- The market price cap (MPC) – the maximum price ($15,000)
- The market price floor (MPF) – the minimum price (-$1,000)
- The cumulative price threshold (CPT) – the maximum total energy and total frequency control ancillary services (FCAS) price that can be reached within a certain time period before the administered price cap (APC) applies
The standard and the settings are linked – if you change the standard, then the settings also change.
The Reliability Standards and Settings Review (RSSR)
The purpose of the modelling work during the review is to forecast the expected amount of USE and estimate the optimal reliability settings. A critical part of this analysis is determining which scenarios and constraints to use for the modelling (usually constraint sets from AEMO’s Electricity Statement of Opportunities).