AEMO LOR market notifications explained - what does a 'lack of reserve' mean?

4 min

Power systems around the world are built and operated with a certain level of reserve – a ‘buffer’ to assist with maintaining power system reliability for energy consumers. Pre-determined reserves in the Australian National Electricity Market (NEM) refer to spare capacity to provide this buffer, over and above the level of electricity demand that is forecast at any given time.

AEMO will often inform the market of ‘lack of reserve’ (LOR) conditions to encourage a response from market participants to provide more capacity into the market: generators may offer in more supply, or consumers (generally large industrial or commercial consumers) can reduce their demand. Both responses have the effect of improving the reserve margins, and maintaining power system reliability. In short, LOR levels are pre-determined electricity reserve levels.

AEMO will issue both forecast (to encourage a response) and actual LOR condition notifications which are tiered as follows:

LOR 1 - Signals a reduction in pre-determined electricity reserve levels. This notification simply provides an indication to the market to encourage more generation. At this level, there is no impact to power system security or reliability.

LOR 2 - Signals a tightening of electricity supply reserves and provides an indication to the market to encourage more generation. At this level, there is still no impact to power system security, however AEMO will bring in available additional resources, such as demand response and support generation (such as diesels if required).

LOR 3 - Signals a deficit in the supply/demand balance, with no market response controlled load shedding may be required. AEMO views load shedding as an absolute last resort to securely manage the wider power system.

AEMO is working actively with Commonwealth and State governments, and the energy industry, so that the NEM power system can operate reliability during extreme summer and high demand conditions.

AEMO will also continue to be open and transparent with the Australian public in relation to how they can help to reduce power during short, extreme LOR 3 condition periods.

All AEMO market notices can be viewed here.


Did you know?

  • The power system is most at risk during high demand days between 4PM to 7PM, most commonly during periods of extreme heat (38 degrees plus).
  • A running pool pump uses approximately 1.5KW per hour. If 100,000 consumers can temporarily switch off their pool pumps during high demand, this can reduce approximately 150 MW from an already strained power system.
  • Turning up your air conditioner from 20 to 24 degrees for three hours can help relieve stress on the network during peak demand.
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