Project EnergyConnect – Market Integration project

Background

AEMO, ElectraNet and Transgrid are partnering to deliver the 900km long energy interconnector Project EnergyConnect, connecting South Australia and New South Wales with an added connection into Victoria, to deliver a range of direct benefits for consumers including lower power prices and improved energy security.

Project EnergyConnect will be approximately 900km in length and delivered in 2 stages:

• Stage 1 150 MW bi-directional capacity connection: between Robertstown and Buronga.

• Stage 2 800 MW bi-directional capacity connection: Construction is scheduled for completion in the last quarter of 2026, AEMO will then commence for release of up to 800 MW, subject to availability of suitable test conditions and successful test outcomes.

Once Stage 2 is complete, it will create a parallel transmission configuration between three adjacent regions which presents new challenges for the NEM, especially for the way negative inter-regional settlement residue is managed.

AEMO has undertaken stakeholder consultation on Project Energy Connect Market Integration, with the final recommendations published on 9 February 2024. Further, a Rule Change Proposal was submitted to AEMC on 23 February 2024, seeking to recommend changes to the existing negative inter-regional settlement residue process.

AEMO has established the Project EnergyConnect – Market Integration (PEC-MI) project under the NEM Reform Program to implement resulting system and procedure changes collaboratively with industry.

PEC-MI is delivering market design changes to accommodate Stage 2. This includes: changes to AEMO’s systems, a rule change for negative residue management and relevant procedure changes.

Scope

The addition of PEC fundamentally changes elements of market design, and AEMO’s integration of PEC Stage 2 into AEMO’s systems is designed in 2 phases:

Phase 1: Integrate PEC Stage 2 into AEMO dispatch systems

• Use the interconnector dispatch integration model
• Revise existing automated Negative Residue Management constraints
• Limit the application of interconnector clamping, to when aggregate loop IRSR is negative. This would limit the extent interconnector clamping is a driver of dispatch outcomes.
• PEC Stage 2 will be registered as a separate interconnector. VNI and VIC-SA will revert to pre-PEC Stage 1 state.
• Refer to AEMO’s Draft HLIA for more information on how AEMO could amend the automated NRM for the transmission loop

Phase 2: Integrate PEC Stage 2 into AEMO settlement systems

• Reallocate negative IRSR when in surplus across the three interconnectors for each trading interval based on region demand.
• Refer to AEMO’s Draft HLIA for more information on how AEMO would implement the AEMC’s Draft Determination on interregional settlement residues and how they are allocated and payable
• Include PEC into the Settlement Residue Auction (SRA).
• Post implementation, continue to monitor value of units available for SRA

Industry engagement

This initiative forms part of NEM Reform Program and market participants can get involved by visiting:

• NEM Reform Forums
• NEM Reform Initiatives

Indicative Timeline

Record of activities

Procedure Changes

AEMO’s Procedures, guidelines and other documents that require changes include:

• SO_OP_3705 Dispatch Procedure
• Automation of negative residue management
• Methodology for the allocation and distribution of settlements residues
• NEM Transmission Network Service Provider Negative Settlements Residue

Further information

For more information, please contact NEMReform@aemo.com.au.