Explaining emergency reserve contracts

10/12/2019
3 min

 

As the national market operator, AEMO’s role is to deliver energy security for all Australians. We do this by working with government and industry to establish a number of processes and arrangements to mitigate risks to energy supply during high demand conditions.

This includes issuing Lack of Reserve (LOR) notices when electricity reserves are depleting as a result of a combination of unplanned conditions. LOR notices provide an indication to the market to encourage more generation. Visit this page for more information about LOR notices.

Another arrangement available to AEMO, particularly during the summer months, is the Reliability and Emergency Reserve Trader (RERT) mechanism. This helps AEMO to maintain power system reliability and system security using reserve generation and demand management contracts from large users, such as industrial or manufacturing businesses, that sit outside the market.

In preparation for summer, AEMO last week published its Summer Readiness Plan, highlighting the plans and actions to prepare Australia’s power system for the summer months, including updated RERT contracts.

Here’s how it works:

This year, AEMO has consulted with the Victorian Government to identify and secure 125 MW of off-market reserves (generation and demand management) under the long notice RERT mechanism to meet the reliability standard.

Further, AEMO will seek to access more than 1,500 MW of short and medium notice RERT via panel agreements, which allow AEMO to more rapidly enter into reserve contracts if required, with no costs incurred unless these reserves are activated.

This initiative enables AEMO to have standby resources to help manage potential high-risk scenarios that can occur in summer.

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