PIAC made a submission to the AEMC’s consultation paper on the efficient provision of inertia. In the submission we highlighted the potential for operational challenges to arise from the existing inertia framework. Namely, declining inertia may pose a future threat to power system security because it is not efficiently procured or allocated in real-time. As such, clearer investment signals are required to meet long-term inertia needs.
PIAC noted that cost recovery mechanisms should reflect that the primary beneficiaries of inertia services are the participants whose presence imposes a need for inertia to be provided. For example, when a large thermal generator such as a coal-fired power station trips, the beneficiary of inertia services is the power station, not consumers.
We recommended the AEMC accelerate the implementation of new arrangements to minimise consumers carrying avoidable costs under the existing framework and to ensure a smooth transition while the cost of inertia services are relatively low.
