With consecutive days of high temperatures forecast throughout the east coast, we break down how electricity reserve levels and notices work during heat events.
AEMO works and collaborates proactively with Commonwealth and State governments, and energy industry stakeholders, so that the National Electricity Market (NEM) power system can operate reliably during extreme summer and high demand conditions such as this week in the east coast.
Lack of Reserve (LOR) market notices are an industry notification mechanism that provides an indication to the market to encourage more generation. In short, LOR levels are pre-determined electricity reserve levels.
Power systems globally 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 NEM refer to the 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.
Dependant on the scale of the heat event, AEMO issues both forecast (as per above, to encourage a market 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.
- LOR 3 -Signals a deficit in the supply/demand balance, with no market response controlled load shedding possibly required. AEMO views load shedding as an absolute last resort to securely manage the wider power system.
As with last summer, AEMO has put in place its Summer Readiness Plan, which includes the sourcing of off-market reserves through the Reliability and Emergency Trader (RERT) mechanism. This initiative enables AEMO to have sufficient resources to manage potential high-risk scenarios that typically occur in summer, such as extreme or extended heat events, bushfires and/or unplanned infrastructure outages.
For more information about how energy reserve levels and RERT works, check out our handy factsheets here.
Energy fast facts for consumers
- The power system is under the most strain during high demand days between 4PM to 7PM, most commonly during periods of extreme heat (38 degrees plus)
- On an average summer day, the lowest demand period during daylight hours is between 11AM and 2PM. Using electrical appliances that can be programmed during this period puts the least amount of strain on our energy systems during a heatwave, especially if you have solar panels installed on your roof
- Using appliances (like your dishwasher or washing machine) later in the evening, from 8PM onwards, can significantly assist our energy systems
- Turning up your air conditioner from 20 to 24 degrees, for even an hour during summer, can help relieve stress on the network during peak demand and save you money
- For every one degree over 38, AEMO estimates an additional 125 MW of demand on the system in the smaller states and can be as high as 250 MW in the larger regions
- If 100,000 consumers temporarily switch off their pool pumps during 4PM to 7PM, which uses 1.5KW an hour, demand can be reduced by approximately 150 MW! That’s enough energy to cover a rise in temperature as outlined in the point above