Essential System Services In The National Electricity Market

• Published date: 30 October 2020
• Subject Matter: Energy and Natural Resources, Energy Law, Oil, Gas & Electricity, Renewables
• Law Firm: FTI Consulting
• Author: FTI Consulting

FTI Consulting examined options for the long-term provision of ancillary services (or "essential system services") in the National Electricity Market ("NEM") in Australia, by drawing on the international experience of our UK and US experts.

Many of the essential system services that are necessary for the secure operation of Australia's National Electricity Market have historically been provided without explicit compensation. Instead, they have been supplied as a by-product of energy produced by synchronous - typically coal-fired - generators.

In the coming years, these generators are scheduled to progressively retire and be replaced by renewables generation which usually does not supply the necessary essential system services as a by-product of operation. This means it will be increasingly challenging to secure the necessary system services to ensure the ongoing secure operation of the Australian energy market.

In light of these growing challenges, FTI Consulting examined how the current essential system services arrangements in the NEM may need to evolve, both in terms of procuring the services (i.e...