Gentrack : Energy Regulation Monitor – Australia

In the dynamic landscape of Australia's energy sector, regulatory changes are underway to shape a more flexible, secure, and efficient market. This update delves into developments across key domains, each contributing to the evolution of the National Electricity Market (NEM) and the broader energy ecosystem following on from our last July Energy Regulation Monitor that you can read here.

Flexible Trading Arrangement

What is it?

In July 2021, the Energy Security Board (ESB) presented its Final Advice for Post-2025 Market Design to Energy Ministers, outlining plans for the implementation of flexible trading arrangements within the National Electricity Market (NEM). These arrangements empower end users to separate controllable electrical sources, such as batteries, solar systems, and electric vehicle charging, from passive sources like household appliances.

This enables consumers to access competitive offers and services for their controllable resources independently, optimizing the value of their Distributed Energy Resources (DER) and be rewarded for their flexibility.

Why is this being implemented?

This rule change request proposes modifications to the National Energy Retail Rules (NERR) and the National Energy Retail Law (NER) based on the recommendations of the Energy Security Board (ESB). The modifications aim to implement:

• Flexible Trader Model 2 (FTM2), allowing end users to establish a private metering arrangement (PMA) for their controllable resources and have them managed by a separate financially responsible market participant (FRMP).
• Minor energy flow metering, to support connection arrangements not currently included in the National Electricity Market (NEM) metering framework. This is achieved by enabling the use of non-traditional metering installations, particularly within PMAs.

How do I comply?

According to AEMO's proposal, consumers have the option to engage multiple financially responsible market participants (FRMPs) for specific devices. Alternatively, they can choose one FRMP for less flexible loads and a different one for flexible loads. Another option is to have all their resources managed by a single FRMP, but with varying pricing options.

How can Gentrack help?

Gentrack can assist in navigating and implementing the proposed modifications to the National Energy Retail Rules and Law. Our expertise in energy market solutions can help end users effectively set up private metering arrangements (PMAs), manage controllable resources, and optimize the value of their Distributed Energy Resources (DER). Additionally, we can provide guidance on engaging financially responsible market participants (FRMPs) and selecting pricing options tailored to individual needs.

When is it being implemented?	Who is impacted?	Regions Covered
Under consultation. 3 Aug 2023 - The Directions Paper outlines options to progress flexible trading of CER, where Residential and SME customers are out of scope. There is consideration for C&I customers	Retailers serving C&I customers. Distributors, other potentials is metering coordinators or metering data providers	Australia -> Electricity -> SA, VIC, SA, NSW, ACT QLD for now

Identity Access Management

What is it?

Identity and Access Management is a unified mechanism to authenticate and authorise external identity when accessing AEMO business services, consolidating and improving overall cyber security controls.

Why is this being implemented?

AEMO's Identity and Access Management (IDAM) services currently operate in a fragmented manner, necessitating users to maintain multiple sets of credentials for accessing AEMO business services. Unfortunately, the existing legacy IDAM services fall short in implementing essential cybersecurity measures, such as multifactor authentication, and are inadequate in meeting the new industry obligations introduced under the SOCI Act.

How do I comply?

The points in discussion highlight various challenges and deficiencies in AEMO's Identity and Access Management (IDAM) services. These include issues with user experience, such as the need for multiple credentials and a lack of integration between different systems. There are also concerns related to governance and compliance, such as the visibility of audit trails. Additionally, the need for enhanced security measures like Multi-Factor Authentication (MFA) is emphasized. The summary suggests a range of future needs and capabilities, such as context-based authentication and exploring data sharing capabilities in markets beyond the NEM.

How can Gentrack help?

Gentrack can assist in streamlining and fortifying Identity and Access Management (IDAM) systems. Our expertise in cybersecurity measures, including multifactor authentication implementation, can enhance security protocols and align with industry obligations. We also offer solutions to improve user experience, ensuring seamless access without the need for multiple credentials. Gentrack's services encompass governance and compliance enhancements, including robust audit trail visibility. Additionally, we can explore advanced capabilities like context-based authentication and facilitate data sharing in broader markets.

When is it being implemented?	Who is impacted?	Regions Covered
Under consultation, could be early 2025	Retailers, Distributors, metering coordinators, metering data providers, all participant roles connected to the market	Australia -> Electricity & Gas -> SA, VIC, SA, NSW, ACT, QLD, WA, NT

Industry Data Exchange rules

What is it?

Over the past 10-15 years, AEMO has acquired various data exchange systems, each using inconsistent standards, protocols, and formats. As AEMO's markets undergo significant transformation, there is a growing need for new data exchange capabilities. However, the absence of a clear target state and roadmap is hindering participants from modernizing their systems and realizing the benefits of their investments. To address this, AEMO is launching an initiative to establish unified data exchange standards, patterns, protocols, payload formats, and channels. This will facilitate a market and domain-agnostic, streamlined, secure, reliable, and scalable centralized data exchange platform.

The following points outline the key challenges identified in discussions with Business and Technical focus groups, categorized by their impact on IDX services.

Challenges:

• Complexity and inconsistency in protocols, formats, and standards.
• Lack of consistent standards across different systems, fuels, and jurisdictions.
• Absence of a clear roadmap for future data exchange capabilities.
• Need for cost-effective centralized services to reduce industry expenses.
• Costly mandatory schema updates, even if they don't impact participants' procedures.

Opportunities:

• Near real-time visibility of critical market transactions.
• Enhanced security for data exchange and centralized access management.
• Improved speed to market for business and regulatory changes.
• Better management of higher volumes of market data.
• Enhanced developer experience.
• Harmonized data exchanges between participants and AEMO market systems for improved customer outcomes.
• Improved transparency of future maintenance costs for data exchange systems.
• Unified data exchange standards across markets, fuels, and jurisdictions.

Considerations for AEMO:

• Exploring event-based solutions for integrated data models to reduce costs.
• Adopting alternate data consumption patterns for simplicity and standardization.
• Integrating B2M and B2B systems for operational and industry efficiency, reducing resources, time, and costs.

When is it being implemented?	Who is impacted?	Regions Covered
Under consultation, could be early 2025	Retailers, Distributors, metering coordinators, metering data providers, all participant roles connected to the market	Australia -> Electricity & Gas -> SA, VIC, SA, NSW, ACT, QLD, WA, NT

Integrated Energy Storage Systems (IESS)

What is it?

The significance of energy storage in the National Electricity Market (NEM) is on the rise, with predictions indicating an even more substantial role in the future. This shift necessitates adjustments in the regulatory framework to accommodate evolving market dynamics.

What is being considered?

On August 23, 2019, the Australian Energy Market Commission (AEMC) received a rule change request from the Australian Energy Market Operator (AEMO). This request aimed to facilitate the integration of storage systems into the NEM, including the formal definition of storage technologies within the National Electricity Rules (NER).

The proposed rule change was designed to address AEMO's concerns about the registration and involvement of various types of storage systems, from grid-scale batteries to collections of smaller batteries, as well as innovative hybrid facilities. AEMO's request aimed to provide precise definitions for storage and hybrid facilities, acknowledging the presence of storage and the bidirectional flows at connection points.

According to AEMO, this proposed rule change would offer greater clarity and transparency for all stakeholders, reduce entry barriers for storage and hybrid facilities, and ease the transition toward an electricity system where expanded storage capacity is crucial to support the variability of renewable energy sources.

When is it being implemented?	Who is impacted?	Regions Covered
June 2, 2024	Retailers, Distributors, metering coordinators, metering data providers. All participant roles connected to the market	Australia -> Electricity -> SA, VIC, SA, NSW, ACT QLD

Two way Network Tariff

What is it?

Adhering to the strict guidelines outlined by the Australian Energy Regulator, the introduction of new market rules aims to streamline two-way network power pricing. These rules include the ability to apply fees for households exporting solar energy to the grid.

It's important to note that implementing two-way pricing doesn't automatically mean mandatory charges for exporting rooftop solar energy. Rather, the goal is for distributors to demonstrate that accommodating increased solar exports can result in higher operational costs for the network. Under this framework, individuals would only be subject to export charges if their exported energy contributes to elevated network expenses, either overall or during specific periods of the day.

What are the guidelines?

Failure to implement suitable price signals for accommodating two-way energy flows may lead to:

• Unnecessary network investments to support increased solar exports, resulting in higher network costs for all consumers and creating disparities between customers with and without rooftop solar or other Distributed Energy Resources (DER).
• Reduced or no incentives for customers capable of responding to price signals by exporting solar energy during periods of high energy demand, such as in the early evening.
• Customers with rooftop solar potentially being restricted from the grid, for example, having their solar panels deactivated by the distributor. This can result in the potential wastage of solar energy.

By offering the option for two-way pricing, distributors can enhance network management by:

• Facilitating the seamless integration of more solar and other DER into the system.
• Introducing more balanced and cost-effective tariff options that incentivize customers to export energy during times of higher demand or when there is an abundance of solar energy on the grid, such as during periods of minimal energy demand or solar overload.

What regions does it cover?

Australia -> Electricity -> SA, VIC, SA, NSW, ACT QLD

ICF 76 Rule - Magnitude of generation and consumption at a NMI

What is it?

The industry is addressing the challenge of participants struggling to identify and quantify export/consumption and import/generation during their onboarding processes. This issue has led to incorrect product offerings, resulting in suboptimal outcomes for both customers and retailers. The lack of visibility in this process also leads to delays and hinders effective customer management, creating additional work for both parties. With the increasing prevalence of solar and battery technology, this problem is expected to become more pronounced.

Why is this being implemented?

The industry aims to enable participants to easily and accurately identify a customer's non-registered or non-classified generation capabilities. This addresses a critical customer need and enhances the overall efficiency of the onboarding process.

How do I comply?

To comply with this initiative, retailers and distributors serving residential, small to medium businesses, as well as commercial and industry sectors, should ensure they have the necessary processes in place to accurately identify a customer's generation capabilities in the CATS system/procedures. This will lead to improved outcomes for all parties involved and support the broader goals of the National Electricity Market (NEM).

For more information, or support with managing these Regulatory changes, get in touch with us here.