IEEE Power & Energy Magazine - September/October 2021 - 43

quantities of each ESS are available. For power systems that
lack competitive tension due to either a small size or market
concentration, a nonmarket procurement mechanism may
be more appropriate. In either case, without appropriately
defined services and compensation mechanisms, gaps are
likely to appear in the market due to insufficient new investment.
Such voids will not be filled without government or
other external intervention.
In particular, DERs and demand-side management can
likely provide ESSs on a cost-competitive basis with traditional
and new grid-scale resources. DERs can be scaled in
a more granular fashion than grid-scale resources once the
appropriate rules and initial participation infrastructure are
established. This may make them an effective option for augmenting
the availability of ESSs on multiple time horizons.
Thus, it is vital that, when revising market arrangements,
DERs are designed to be part of the solution. If they are not
explicitly designed for, there is a real risk that DERs will not
be able to participate. The approach needs to balance the
requirements of visibility for system operation, distributionlevel
operation requirements, and the implementation cost
of any control and communications systems required to
facilitate market access. Explicitly considering how DERs
participate in ESSs will enable proponents to build a clear
business case and " value stack " alongside other services to
bring the required systems and solutions to market. Without
such, mechanisms could drive separate capital investments
to meet each of the power system requirements, increasing
costs to consumers.
The Australian Approach
and the Future of ESSs
Australia's electricity system is rapidly transitioning from a
generation fleet dominated by coal and gas to accommodating
the world's highest penetration of residential solar PVs
(22% of all stand-alone houses), with the regular instantaneous
provision of a 100% renewable supply likely within
five years. This will occur on the east coast, with a grid
covering more than three times the area of Texas and
in southwestern Australia across an area the size of the
United Kingdom. Catalyzed by the rapid pace of change
and through a handful of significant system security
events, Australian governments have instigated sweeping
market reforms to support the transition to higher VRE
penetration. A key focus is on ESSs, with the recognition
of services once provided by synchronous generators
as a byproduct of energy generation and not yet replaced by
inverter-based technologies.
Although there are regulatory and physical differences
between the west and east coast markets, the philosophical
and economic principles established during the markets'
conception have been maintained. Included are the importance
of efficient price signals in operational time frames
based on voluntary bids and offers, facilitating overall
dispatching while maximizing market-based outcomes
september/october 2021
and minimizing interventions. Regarding the reform of
specific system services, Figure 8 outlines a graphical
road map indicating the pathways for reform in both markets.
For the NEM, this involves the possible implementation
of the following:
✔ a new operating reserve spot market likely based on
a 5- or 30-min ramping availability product procuring
either the total ramp or holding reserve out of the
market through a separate call mechanism
✔ a new fast-frequency response market (sub-2s) to encourage
and reward the provision of rapid frequency
control from batteries and the refinement of the mandatory
requirement for primary frequency control
(recently enacted and already delivering market improvements
to systemwide frequency performance)
✔ a new framework for system strength, where the system
operator sets minimum/efficient levels (via a
short circuit current ratio) at all nodes of the network,
and the network service provider is obliged to maintain
those levels. There will likely be a mechanism
to schedule synchronous resources in operational time
frames to provide inertia and system strength with
support for the longer-term consideration of an inertia
spot market.
For the WEM, the reform pathway includes the following:
✔ a new spot market for regulation frequency management
and the transformation of the current contingency
frequency control framework to spot markets
similar to the NEM
✔ the implementation of a ROCOF control service spot
market to pay for inertia in operational time frames-
the first such market we are aware of anywhere in
the world.
For all new services, there is an explicit awareness of the
importance of setting technical requirements to support and
encourage emerging technologies and, in particular, possible
future DER capabilities and demand-side participation. Both
the NEM and WEM reform programs are ongoing. Development
to date has required robust collaboration across market
operators, regulators, and government agencies and extensive
engagement with market participants, including generators,
retailers, DER aggregators, consumer representatives,
and network operators.
The rapid pace of change has been catalyzed by legislated
net-zero emission targets from states and territories toward
2050, although a national target has not yet been set. Australia
is the world's largest exporter of coal and natural gas. Ensuring
the impact of measures to address climate change generates
significant political debate with extensive business lobbying.
This may, in part, explain why Australia has struggled
during the past two decades to navigate a middle path through
the electricity transition with bipartisan support. But even
with uncertain support at a federal level, and perhaps, in part,
because of it, Australian households have embraced rooftop
solar at world-leading levels, and industrial buildings are
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IEEE Power & Energy Magazine - September/October 2021

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