Infigen have submitted a letter to the Australian Energy Market Commission’s Chairman requesting the introduction of an Operating Reserves and Fast Frequency Response rule change. Infigen state in their letter that this market proposal they have put forward would “relatively simple to implement and would provide added confidence that sufficient resources to respond to unexpected changes in supply or demand would be available”, as stated in their letter.
Most importantly, Infigen have stated a rule change such as this would remove the reliance on and provide an alternative to the RERT (Reliability and Emergency Response Trader) procurement and contracts of which cost consumers $34.5 million, and avoid further intervention in the market by the market operator. Infigen believe that a “free-rider” problem may occur under tight capacity scenarios in the market increased risks of random government interventions to avoid adverse market and operational outcomes.
As such, they believe “marginal value of incremental capacity is by definition very high and delivers considerable benefits to the entire market’” calling out that raising the market price cap does not solve the issue with systemic risk to portfolios/participants caught short due to plant outages or network failures. Instead, Infigen have called for the introduction of a Operating Reserves market for near term to avoid increasing the market price cap and increase the reliability and security of supply to consumers.
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