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agnostic, the provision of services by DERs necessitates a consideration of the impact upon distribution
network operations. Coordination with the relevant
distribution network operator or distribution system
operator and, as it is being discussed in Australia, distribution market operator, is therefore critical to allowing local competition and mitigating local adverse
effects from the provision into wholesale markets.
✔ Co-optimization of multiple services: Any market or
regulatory design will ultimately have to relate the provision of system security services to each other and with
energy dispatch. System services are intended to provide a secure operating envelope within which energy
dispatch can occur. As such, there are varying degrees
and types of interlinkages between energy provision and
system service provision. Three forms of co-optimization underpin constraint formulations. The first is " no
co-optimization with other system conditions, " which
is usually specified under minimum service level provision (for example, in the NEM, the minimum system
strength unit configurations in South Australia). The second is " co-optimization with other ancillary services and
energy limits, " for instance, the development of security
envelopes through the co-optimization of inertia against
PFR and the maximum contingency sizing previously
discussed. Finally, there is the " comprehensive co-optimization with other ancillary services, energy limits, energy flows, and individual or groups of resources. " These
constraint formulations are often highly locational and
resource specific, for example, in the NEM, the system
strength constraints relating to renewable generation in
Victoria and Queensland. The degree of co-optimization
can also reflect of the level of system security risk. This
may include minimum provision across localized regions
such as the co-optimization and scheduling of energy, inertia, PFR, and contingency levels on regional levels, given the risks of cascading scenarios or system separation.

Concluding Remarks
The traditional physical features that have characterized electricity grids over the past 100 years and more are changing
in different ways in the transition toward low-carbon grids. In
this context, power systems around the world, and particularly
in Australia, are witnessing increasing challenges in providing
security services associated with large shares of renewables
and DERs, most of them connected via power electronic interfaces. However, these challenges and the resulting increasing
system fragility can be and are already being very effectively
dealt with from a technical perspective, utilizing innovative
operational solutions and new technologies with an outlook to
integrate 75% renewables in Australia by 2025.
However, fundamental challenges remain as to how new
security services should be procured and provided in a market context as well as the role of regulation and energy policy.
While several options exist, the integrated techno-economic
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challenges that market designers and regulators face are significant and are, as of June 2020, the object of ongoing discussions in Australia.
Given the deep and complex interactions of technical and
economic aspects, as outlined in this article, we believe that
a from-physics-to-economics approach to the low-carbon
energy market and regulatory design may be more effective
than in the past, when economic designs paid less attention to
physical considerations. This will require a greater presence
and engagement of power system engineers and researchers
at the relevant energy policy and regulation discussion tables.

For Further Reading
P. Mancarella et al., " Power system security assessment of the
future national electricity market, " Melbourne Energy Inst.,
Australia, Tech. Appendix, June 2017. [Online]. Available:
https://www.energy.gov.au/sites/default/files/independent
-review-future-nem-power-system-security-assessment.pdf
" Renewables integration study, " Australian Energy Market Operator, Melbourne, Australia, Mar. 2020. [Online].
Available: https://aemo.com.au/en/energy-systems/major
-publications/renewable-integration-study-ris
" Queensland and South Australia system separation
on 25 August 2018, " Australian Energy Market Operator,
Melbourne, Australia, Final Rep., Jan. 2019. [Online]. Available: https://www.aemo.com.au/-/media/Files/Electricity/
NEM/Market_Notices_and_Events/Power_System_Incident
_Reports/2018/Qld-SA-Separation-25-August-2018-Incident
-Report.pdf
S. Puschel, M. G. Dozein, S. Low, and P. Mancarella,
" Separation event-constrained optimal power flow to enhance resilience in low-inertia power systems, " Electric
Power Syst. Res., vol. 189, Art. no. 106,678, Dec. 2020. doi:
10.1016/j.epsr.2020.106678.
F. Fahiman, S. Disano, S.M. Erfani, P. Mancarella, and
C. Leckie, " Data-driven dynamic probabilistic reserve sizing based on dynamic Bayesian belief networks, " IEEE
Trans. Power Syst., vol. 34, no. 3, pp. 2281-2291, May 2019.
doi: 10.1109/TPWRS.2018.2884711.
F. Billimoria, P. Mancarella, and R. Poudineh, " Market
design for system security in low-carbon electricity grids:
From the physics to the economics, " Oxford Inst. for Energy
Studies, U.K., EL41, 2020. [Online]. Available: https://www
.oxfordenergy.org/wpcms/wp-content/uploads/2020/06/
Market-design-for-system-security-in-low-carbon-electricity
-grids.pdf

Biographies
Pierluigi Mancarella is with the University of Melbourne,
Melbourne, 3010, Australia, and the University of Manchester, Manchester, M13 9PL, U.K.
Farhad Billimoria is with the Australian Energy Market
Operator, Melbourne, 3010, Australia, and the University
of Oxford, Oxford, OX2, U.K.
p&e

march/april 2021

https://www.energy.gov.au/sites/default/files/independent-review-future-nem-power-system-security-assessment.pdf https://www.energy.gov.au/sites/default/files/independent-review-future-nem-power-system-security-assessment.pdf https://aemo.com.au/en/energy-systems/major-publications/renewable-integration-study-ris https://aemo.com.au/en/energy-systems/major-publications/renewable-integration-study-ris https://www.aemo.com.au/-/media/Files/Electricity/NEM/Market_Notices_and_Events/Power_System_Incident _Reports/2018/Qld—SA-Separation-25-August-2018-Incident-Report.pdf https://www.aemo.com.au/-/media/Files/Electricity/NEM/Market_Notices_and_Events/Power_System_Incident _Reports/2018/Qld—SA-Separation-25-August-2018-Incident-Report.pdf https://www.aemo.com.au/-/media/Files/Electricity/NEM/Market_Notices_and_Events/Power_System_Incident _Reports/2018/Qld—SA-Separation-25-August-2018-Incident-Report.pdf https://www.aemo.com.au/-/media/Files/Electricity/NEM/Market_Notices_and_Events/Power_System_Incident _Reports/2018/Qld—SA-Separation-25-August-2018-Incident-Report.pdf http://www.oxfordenergy.org/wpcms/wp-content/uploads/2020/06/Market-design-for-system-security-in-low-carbon-electricity-grids.pdf http://www.oxfordenergy.org/wpcms/wp-content/uploads/2020/06/Market-design-for-system-security-in-low-carbon-electricity-grids.pdf http://www.oxfordenergy.org/wpcms/wp-content/uploads/2020/06/Market-design-for-system-security-in-low-carbon-electricity-grids.pdf http://www.oxfordenergy.org/wpcms/wp-content/uploads/2020/06/Market-design-for-system-security-in-low-carbon-electricity-grids.pdf

IEEE Power & Energy Magazine - March/April 2021

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