Featured image: Tesla
Tesla called on Australia's energy authorities to speed up reform of energy market rules and withstand the aggressive pressure from existing coal, gas, and grid companies for further delays.
The company emphasizes that reforms are needed to encourage the deployment of flexible assets and improved market efficiency, as well as assistance in the transition to clean energy.
On 28 November 2017, the AEMC made a final rule to change the settlement period for the electricity spot price from 30 minutes to five minutes, starting in 2021. Five minute settlement provides a better price signal for investment in fast response technologies, such as batteries, new generation gas peaker plants and demand response.
Now, incumbent coal and gas generators, including most network operators and the federal government-owned retailers Red Energy and Lumo, are calling for the reform to be delayed from 12 months, and up to 24 months, citing the impact of the Covid-19 pandemic. Origin Energy joined those ranks, becoming the first of the big three retailers to openly support the delay.
Battery storage and demand response companies are calling for the reform to proceed on schedule. Only the Queensland government owned Stanwell has broken ranks with the incumbent generators, saying the delay would add costs rather than save them.
Tesla and others say that the industry has had more than three and a half years to prepare, and that should be enough. The South Australia and ACT governments also oppose the delay.
In the appeal, Tesla describes its position regarding a possible delay.
We do not support delaying 5MS given:
• 5MS has been on the reform agenda for more than 3 years, and as recognized by AEMO, a 12 month delay is pinned on several subjective assumptions that were made early on as the pandemic impacts were still unfolding;
• Concern of the financial viability of market participants should not be solved through delaying market improvements (or passing additional costs to end-consumers), and are already being addressed through other mechanisms (e.g. economy wide government
support payments, AER exempting retailer’s network charges for customers in debt, increased government support for energy concession payments, and network regulatory frameworks that smooth out falls in volumetric-based revenues);
• As noted by AEMO, a delay to 5MS will prolong inefficiencies in the market as well as likely increase implementation costs, which will then be passed through to customers;
• Delaying agreed reforms will increase risk premiums, and in particular defer the benefits arising from the introduction of new flexible technologies (e.g. battery energy storage and demand response) where these assets coupled with optimization trading platforms will be able to drive significant market efficiencies;
• Developers of battery projects are generally concerned about the need and speed of implementing market reforms to better recognize the value of services - delaying 5MS prolongs uncertainty for a technology that has already demonstrated its ability to deliver
outstanding outcomes for Australia’s energy consumers upon immediate deployment;
• As AEMO has identified through system planning, there is an increasing need for storage (at all scales) to assist with system reliability and operability as increasing levels of renewables enter the NEM. 5MS is one element to assist incentivising near-term storage
projects and introducing delays or risks to this pipeline should be captured as a cost.