System services rule changes consultation paper 

PIAC lodged a submission to the Australian Energy Market Commission (AEMC) on the system services rule changes consultation paper.

In the coming decade, there will be more variable generation and high price events will be harder to predict on the basis of high demand and low generation alone as diurnal and seasonal factors influence the state of charge of energy storage systems. 

Price signals, such as through a market or financial incentives, are preferable to ensure the optimal mix of flexible generation, storage and demand side resources and should be pursued where net benefits justify their introduction. The framework for providing system services should also err on the side of creating a price signal to provide a service rather than setting a mandatory requirement, as well-functioning markets are typically better able to adapt and reflect changes in value of a service. Adaptable prices are important for promoting the long-term interest of consumers. 

Many of the rule change proposals seek to create or substantially amend existing markets to provide system services. PIAC considers that, unless trivial, adaptable or urgently required for system security, these should not progress in advance of more strategic and comprehensive market design processes such as the ESB’s post-2025 market design.