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UPDATE FROM ACTING CHIEF EXECUTIVE OFFICER KAREN OLESNICKY It has been a busy couple of months for AEMO and the energy industry since our last Energy Update, with stakeholder engagement forums and working groups kicking off as part of our WA Market Reform Program,the release of the first Power of Choice procedures, and of course the recent ‘Black System’ event which occurred in South Australia (SA) in September. As we continue to look at the short and longer term future for the industry, AEMO’s vision is more important than ever, and remains at the centre of everything we do – to provide energy security for all Australians. As part of this commitment to energy security, AEMO has produced two reports following the SA event, a preliminary operating incident report published on 5 October and a further update to that published on 19 October. Like the 5 October preliminary report, the 19 October update objectively looks at the pre-event situation, the actual event, and the restoration process, and clearly outlines next steps for AEMO in terms of further analysis and reporting. You can read more about these reports on page 3.

We are continuing to work closely with industry, stakeholders, and governments at all levels on this issue, and factoring this into our major forecasting and planning reports, and our Future Power System Security Program. It has been pleasing to see the industry come together as one to work closely throughout the event, both in bringing the system back to a stable operating state, as well as the subsequent work in investigating and reporting on the incident. AEMO welcomes the opportunity to provide input into reviews into the SA power event, including the review focused on developing a National Electricity Market blueprint, which is to be chaired by commonwealth chief scientist Dr Alan Finkel. On that note, I’m pleased to announce that AEMO will present a keynote address at an upcoming CEDA event in Melbourne in early December to discuss some of the lessons learned from the SA ‘Black System’ event, as well as our focus for the immediate future. We will also share some key insights from our upcoming 2016 National Transmission Network Development Plan (NTNDP), which provides an independent, strategic view of the efficient development of the National Electricity Market (NEM) transmission grid over a 20-year planning horizon. Also on the calendar for December is the release of three of AEMO’s major reports, the NTNDP, the 2016 National Gas Forecasting Report (NGFR), and the Western Australia Gas Statement of Opportunities (WA GSOO). The NGFR will provide a forecast of annual gas consumption and maximum gas demand for the eastern and south-eastern Australia gas region over a 20-year outlook period. The WA GSOO will include forecasts of gas demand and supply, an overview of gas infrastructure in the state, and emerging issues affecting the gas industry.

As part of AEMO’s ongoing reform work in Western Australia (WA), one of our next major milestones will be AEMO taking account and full responsibility for the functions of System Management on 1 November 2016. To continue to allow the transition to be as smooth as possible for market participants, AEMO will continue to operate from the East Perth Control Centre. This will allow us to continue our close working relationship with Western Power as the principal network operator in the South West Interconnected System (SWIS). This date also marks the transition of the Retail Energy Market Company (REMCo) functions into AEMO. Keep an eye out for our December edition of Energy Update for more information on this exciting development. With summer fast approaching, AEMO recently hosted emergency exercises for testing NEM emergency processes. These exercises provide an opportunity for AEMO, government representatives, and network service providers to practise their various emergency response functions in the event of major supply disruptions. In November, AEMO will also host a specific summer preparedness event for Victorian stakeholders, with presentations from Emergency Management Victoria, and other industry participants. Please keep an eye out for our upcoming major reports, and I will continue to keep you up to date with the many important and exciting initiatives underway at AEMO.



Update from Acting Chief Executive Officer Karen Olesnicky AEMO releases preliminary incident operating reports into South Australia’s state-wide power outage The latest news from AEMO’s Power of Choice implementation program AEMO facilitates annual power system emergency exercises

Energy Update October 2016

Western Australia Market Reform Program – stakeholder forums underway P7 AEMO’s launches new online and face-to-face gas training courses P8 Sustainability at AEMO – a year on P9 September - October conference wrap up P11 The people behind AEMO P12 In brief P6

SOUTH AUSTRALIA SYSTEM BLACK E V E N T R E P O RT S On Wednesday, 28 September 2016, South Australia experienced a state-wide power outage (referred to as ‘SA region Black System’) at 16:18hrs Australian Eastern Standard Time (AEST) during severe storm activity in the state. AEMO has since released two preliminary incident operating reports following this event, an initial report on 5 October and an updated report on 19 October. On 5 October 2016, AEMO released its first preliminary report into the SA region Black System based on early data and information available to AEMO as at 9.00 am, Monday, 3 October 2016. This report explained how severe weather moved through South Australia (SA) on the afternoon of Wednesday 28 September 2016, with high winds, thunderstorms, lightning strikes, hail, and heavy rainfall. Data showed that at 16:18hrs, following multiple faults in a short period, 445 megawatts (MW) of wind generation disconnected, affecting the region north of Adelaide. The uncontrolled reduction in generation increased the flow on the main Victorian interconnector (Heywood) to make up the deficit and resulted in the interconnector overloading. To avoid damage to the interconnector, the automatic-protection mechanism activated, tripping the interconnector and resulting in the remaining customer load and electricity generation in SA being lost. As designed, this automatic-protection operated in less than half a second at 16:18hrs and the event resulted in the SA regional electricity market being suspended. On 19 October 2016, AEMO published an update to is preliminary report incorporating additional information based on further analysis as at 12 October 2016. In this updated report, AEMO reported that five system faults occurred within a period of 88 seconds on 28 September 2016, leading to six voltage disturbances.

Preliminary discussions with wind farm operators suggest the inability to ride through all disturbances was due to ‘voltage ride-through’ settings set to disconnect or reduce turbine output when between three to six disturbances are detected within a defined time period. The two contracted System Restart Ancillary Services (SRAS) suppliers both experienced difficulties in providing system restart services due to two separate faults. Both facilities successfully tested their restart capacities earlier this year, so AEMO will further explore the nature of the faults experienced on 28 September 2016. Restoration of electricity load was able to commence within three hours of the Black System event, with all load that could be restored (approximately 80-90%) being restored within a further five hours. Following the construction of temporary towers, and the restoration of three of the four damaged transmission lines, ElectraNet was able to meet power requirements in SA from late evening on 12 October 2016. AEMO is continuing to consult with wind farm operators and wind turbine manufacturers to better understand the impact on the power system of their ride through settings. Several wind farms have already implemented revised settings allowing them to ride through a higher number of disturbances. AEMO returned the SA spot market to normal operation at 23:30 (AEDT) on 11 October 2016, following the formal notification that the Ministerial direction to suspend the market had been revoked. AEMO will present a further update ahead of the December COAG Energy Council meeting, and anticipates that a detailed report on the Black System event in SA, including final recommendations, will take up to six months to complete. AEMO acknowledges and appreciates the ongoing support and significant work undertaken by generators, network service providers and others across the industry to help restore power to SA following the outage, and to promptly provide the data used in AEMO’s analysis to date. AEMO supports broad industry and government engagement on this matter, and a coordinated national approach to developing and implementing recommendations to improve any issues uncovered by investigations into the SA System Black event. For all enquiries, please contact

Energy Update October 2016


T H E LATE ST NEWS FR O M A EMO’S P O WER OF CHOICE IM P LEMENTAT ION P R O GR A M It’s been a busy few months for AEMO’s Power of Choice (PoC) team, with the first of the PoC Procedures Package (PoC Procedures Package 1) now complete and available online as of 1 September 2016. Jointly led by the Council of Australian Governments (COAG) Energy Council, the Australian Energy Market Commission (AEMC) and AEMO, the PoC reforms program is a major project for our business and forms one of AEMO’s strategic initiatives for 2016-18. The PoC reforms intend to support the National Electricity Market (NEM) to meet consumer needs over the next 15–20 years by: •  Providing Australian energy consumers with the information, education, incentives and technology they need to help efficiently manage their electricity use. • Providing network operators, retailers and other parts of the electricity supply chain with incentives to better support consumer choice, and use flexible demand to reduce overall industry capital and operating costs. AEMO’s role in supporting the PoC reform program is to develop and execute an efficient and effective implementation program that best meets the needs of both consumers and industry.


Energy Update October 2016

AEMO’s first completed package of procedure changes for National Electricity Rules (NER) amendments (PoC Procedures Package 1) relates to reforms around Competition in Metering, Embedded Networks, and Metering Replacement Processes. While the NER is generally prescriptive on procedure requirements, there were features of the impacted procedures in PoC Procedures Package 1 that could have been executed in a number of different ways. To make sure AEMO had captured the views and addressed the needs of a range of market participants when considering the best way to implement the amended procedures, AEMO undertook two extensive rounds of stakeholder consultation before publishing the final PoC Procedures Package 1 online on 1 September 2016. Work has already started on PoC Procedures Package 2, relating to accreditation and registration requirements, with formal stakeholder consultation commencing in October 2016. The final PoC Procedures Package 2 will be published by 1 March 2017. Running concurrently to this is an additional AEMO PoC work stream focused on updating the B2B Framework. The AEMC published the final rule and determination for updating the B2B Framework on 30 June 2016 – this establishes new Information Exchange Committee (IEC) arrangements and requirements for B2B Procedures. The IEC is responsible for the governance of B2B Procedures.

Specifically, the rule requires: • By 1 May 2017, the IEC must recommend a change to the B2B procedures to be consistent with the draft rule (including provision for services in the ‘minimum services specification’ in the NER). • By 1 June 2017, AEMO must publish the new B2B procedures and information on the process for accreditation as a B2B e-hub participant. • By 1 December 2017, new B2B procedures would commence – aligning with the go live dates for the Metering Competition and Embedded Network rule changes. A lot of work has been done to establish a new IEC which met for the first time in September. The new IEC includes one consumer representative, one third party, one metering service provider, one retail member, one distribution network service provider, two to four discretionary members to be appointed by AEMO, and an AEMO Director as the IEC Chair. AEMO Director Mr John Pittard has been appointed the IEC Chair. Mr Pittard is also Chairman of RXP Services Limited and non-executive director of Barnardos Australia. Mr Pittard has previously held senior executive roles with some of Australia’s largest corporations, including NewsCorp Australia, Telstra, Pioneer International, and Shell Australia, and has been a Director of REA Group and CareerOne Limited. For further information, please contact Antara Mascarenhas, Principal Policy and Regulatory Engagement.

Energy Update August 2016


AE MO FA C I L I TAT ES ANNUAL P O WER S Y S T E M E M ER G EN CY E X E R C I SE S In September, AEMO held a series of activation exercises to test the official National Electricity Market (NEM) emergency processes. The exercises provided an opportunity for AEMO and market participants to practice their various roles in the event of major supply disruptions.

Exercise Skywiper was facilitated by AEMO for the National Electricity Market Emergency Management Forum (NEMEMF). As the operator of the NEM, AEMO is responsible for coordinating annual emergency exercises to test jurisdictional arrangements and emergency management protocols. The exercises were split across two days – one for northern NEM participants (Queensland, New South Wales, Australian Capital Territory and the Commonwealth Governments), and one for southern NEM participants (South Australia, Victoria, Tasmania and the Commonwealth Governments). Both days were well attended and provided participants with the means to explore relevant operational and communications plans, procedures, practices, and protocols.

These particular exercises provided participants an opportunity to practice Mandatory Restriction processes during a level five emergency under the Power System Emergency Management Plan (PSEMP), including roles, responsibilities and procedures implemented by emergency management functions including the NEM Responsible Officer, the Jurisdictional System Security Coordinator, the Jurisdictional Responsible Officer, and the emergency and media and communications duty managers. For further information, please contact Matthew Clemow, Group Manager Gas RTO, Real Time Operations.

Energy Update October 2016


WA M A R KET R E F O R M PROGRAM– STA K E H OL DER FORU M S UNDERWAY The first of AEMO’s Western Australia (WA) stakeholder engagement forums and working groups kicked off in October as part of the WA Market Reform Program (WAMRP) with market participants. The WAMRP is a program initiated by AEMO to deliver the WA Government’s Electricity Market Review (EMR) reforms, and to prepare AEMO and the Wholesale Electricity Market (WEM) market participants for change. The changes will have implications across retail, wholesale and system operations in WA. The aim of the program is to ensure the reforms are efficiently implemented, and that both AEMO and market participants are ready for the changes to markets and system operation by 1 July 2018. This program forms part of AEMO’s strategic initiatives for 2016–18.


Energy Update October 2016

The program plans to deliver via three workstreams: • The Retail workstream will implement processes and systems required by AEMO to perform retail market operations, and prepare for the future implementation of full retail contestability. • The Wholesale workstream will facilitate transitional arrangements for the Reserve Capacity Mechanism (RCM) and prepare a RCM auction, implement market systems to support the new WEM real-time market for energy and ancillary services, and replace existing settlements and prudential processes and systems. • The System operations workstream will implement power system operation processes required by AEMO to support the new WEM. The WAMRP forums and working groups will enable AEMO to seek feedback and consult with market participants and stakeholders, as well as provide information and discuss specific issues.

AEMO hosted 23 external stakeholders at the first WAMRP System Operations Forum meeting on Tuesday 18 October, facilitated by AEMO’s Clayton James, with support from experts on the east coast. AEMO’s Allicia Volvricht hosted the first WAMRP Retail Forum meeting on Friday, 21 October, and three further forum meetings were held between 24 and 26 October. A further 13 WAMRP-specific stakeholder forums have been scheduled in the final quarter of 2016. Below are the WAMRP forums and working groups: • Retail Forum • Real Time Market Forum • Settlements Forum • Reserve Capacity Mechanism Forum • System Operations Forum • IT Forum • Real Time Markets Working Group • Settlements Working Group. For more information about the WAMRP visit AEMO’s website or contact Greg Ruthven, WA Market Reform Strategic Advisor, AEMO.

AEMO’S LAUNCHES NEW ONLINE AND FA C E - T O - FA C E G A S TRAINING COURSES In October, AEMO launched its new gas overview training courses – An overview of the Short Term Trading Market (STTM) and An overview of the Declared Wholesale Gas Market (DWGM). Designed by AEMO’s industry experts, the new gas e-learning program provides an overview of the east-coast gas markets and is broken down into specific modules so participants can go through the content at their own pace. The course includes eight hours of e-learning which acts as a great precursor to AEMO’s face-to-face gas training, and provides participants with an in-depth understanding of: • AEMO’s gas markets including eastern and south-eastern markets, the Gas Bulletin Board and the Wallumbilla and Moomba gas supply hubs.

•  About the DWGM and Declared Transmission System operations in Victoria, including trading participant arrangements, system security, and key market concepts and processes. • Settlements and Prudentials including markets settlements comparisons and an explanation of settlement and prudential concepts. • The Wallumbilla and Moomba Gas Supply Hub (GSH) covering of what a gas exchange is, how to register for the GSH, an overview of market and legal frameworks, trading and market operation, gas delivery, and market support.

Next training courses Short Term Trading Market

28 November 2016 Brisbane

Declared Wholesale Gas Market

2 December 2016 Melbourne

For more information about AEMO’s new Gas Market Overview training course, visit AEMO’s website. If you have any questions, please contact

Interested participants can access and sign up for these courses via AEMO’s website and can choose to enroll in either both the e-learning and face-to-face training, or just the e-learning course.

• How the STTM operates, including key arrangements with trading participants, market fundamentals, emergency arrangements.

Energy Update October 2016



Following extensive consultation and engagement with AEMO employees, in September 2015, we proudly launched our Sustainability Program alongside our Sustainability Commitment. Sustainability commitment AEMO’s sustainability commitment aims to meet three objectives:

• Foster a collaborative and inclusive culture. • Strengthen engagement with the community. • Reduce environmental impact and seek out greater resource efficiency. We will meet our sustainability aims by developing business practices that benefit our workforce, community, and the environment.

Sustainability program AEMO’s internal sustainability program outlines the action we will take to deliver on our commitment. As part of this program, AEMO aims to:

• Reduce the environmental impact of corporate operations, and achieve greater resource and economic efficiencies. • Introduce sustainability considerations into AEMO’s procurement processes to make sure the products and services we use are consistent with our sustainability commitment. • Increase employee participation in volunteering activities to improve health and well being among employees and the community. Community partnerships AEMO recognises the value of stakeholder engagement and aims to increase the level and quality of our engagement with the wider community. Working in partnership with community organisations, we can contribute to the community in which we operate by donating our skills and our time. So far this year, more than 20 employees have volunteered with our official community partner organisations, Vision Australia and the Power of Engineering.


Energy Update October 2016

A platform established to improve on in the future Since implementing our Sustainability Program and Sustainability Commitment, AEMO is proud to see some notable areas of improvement:

•  Paper use per person – down from

an average of 3,566 to 2,819 pages

in 2015–16 (excluding WA).

• Volunteering hours – up from 126 hours total in 2014–15 to 285 hours in 2015–16. • Energy use per person – down from 10,747 kWh in 2014–15 to 8,077 kWh in 2015–16. For further information, please contact




On Thursday, 15 September, AEMO Chief Operating Officer Mike Cleary presented at JANA’s annual conference which explored infrastructure investment in a world of uncertainty and disruption.

In late September, Babak Badrzadeh, AEMO Network Models Specialist, presented at the Australasian Universities Power Engineering conference.

Mike presented on AEMO’s roles and responsibilities as Australia’s national energy markets and power systems operator. Mike explained how AEMO’s highest priority is managing and maintaining power system security and supply reliability now and into the future, in adherence to the national gas and electricity objectives, laws and rules, and working within the legislated policy and market frameworks of the day. Mike also explained AEMO’s role as an independent advisor to governments and industry to support well-informed energy policy decisions and drive efficient investment and development in Australia’s gas and electricity markets. Mike wrapped up the session by taking attendees through the high-level findings of AEMO’s 2016 Electricity Statement of Opportunities which was released in August this year.

Babak presented on ‘Power system dynamic modelling and simulation for analysing rapidly changing power system’, elaborating on the application of different types of power system simulation models within AEMO. Babak discussed the impact of a rapidly changing power system and generation mix in modelling techniques and requirements. Babak took attendees through several practical examples where AEMO has successfully applied novel and unconventional power system modelling and simulation methods to ensure security and efficiency of the National Electricity Market power system. Nilesh Modi, Engineer, Operations, played an active role in organising the event as part of his role as Institute of Electrical and Electronics Engineers (IEEE) Queensland - Power and Energy Society chapter chair. During the conference dinner, Nilesh presented the IEEE Queensland - PES chapter’s Outstanding Engineer Award to Prof. Simon Bartlett from the University of Queensland.

Energy Update August 2016





On Monday, 10 October, Dr Jenny Riesz, Principal Market Policy Development, presented at the Australian Institute of Energy Symposium.

On Wednesday, 19 October, David Swift, Executive General Manager - Corporate Development, presented at the Energy Users Association of Australia’s inaugural South Australian Energy Forum.

Jenny presented on AEMO’s Future Power System Security program. Jenny described the stakeholder consultation process for how AEMO identified and prioritised future power system challenges, and the four ‘high priority’ areas identified: frequency control; management of extreme power system conditions; system strength; and, visibility of the power system. Jenny gave a non-technical introduction to each challenge and outlined AEMO’s work program on each. Conference participants came from a broad range of industries, and were keen to hear about AEMO’s work in this area. Jenny simplified a very complex and technical area of work to deliver an easy to understand, nontechnical presentation.

Key issues on the agenda included the role of renewable energy, plans to improve energy security, and efforts to bring more economically sustainable electricity and gas prices. The South Australian Energy Forum provided Energy users the opportunity to hear directly from The Hon Tom Koutsantonis MP, South Australia’s Minister for energy about government policy to address security concerns. Joining Minister Koutsantonis on the stage were some of Australia’s industry experts, policy makers, regulators and commentators, including David Swift. Given strong stakeholder interest, David’s presentation covered: • The sequence of events leading to the SA system black on 28 September. • How power was restored. • What happened when the market was suspended. David also presented on how AEMO is responding to the ‘Black System’, including by thoroughly investigating the event and providing regular updates on our findings. These findings, and any recommendations with respect to mitigating actions, will inform AEMO’s Future Power System Security program. This program of work is building on our understanding of the opportunities and challenges in operating a stable and secure power system with less synchronous generation.


Energy Update October 2016

THE PEOPLE BEHIND AEMO… INTRODUCING DR JENNY RIESZ, P R I N C I PA L M A R K E T P O L I C Y D E V E L O P M E N T, C O R P O R AT E D E V E L O P M E N T In this section, we take you behind the scenes at AEMO to introduce you to some of our employees. This month we spoke with Jenny Riesz, Principal Market Policy Development, Corporate Development, about her role at AEMO and the Future Power System Security Program.

Energy Update (EU): Thank you for sharing your story with us, Jenny. Can you tell us a bit about your background? Jenny Riesz (JR): Before joining AEMO, I worked at the University of New South Wales in a research position in electricity market design. Prior to that, I worked in consulting roles with ROAM Consulting and AECOM, providing energy market analysis and modelling for clients. Before that, I completed a PhD in physics, studying the quantum and spectroscopic properties of melanin skin pigment. EU: Can you explain a bit about your role here at AEMO? JR: I work in the Future Power System Security (FPPS) program which looks forward over the next ten years to identify future challenges that will arise in power system security, and to explore ways that we can address those challenges most efficiently. My role looks at frequency control challenges. In particular, we are examining the impact of growing levels of wind and solar photovoltaic (PV) generation, and how this growth could affect frequency control. Some of it is to do with managing frequency in very short time frames – within seconds of a power system event occurring – and having the appropriate tools and mechanisms to very rapidly arrest, stabilise and correct the frequency disturbance.

EU: What are some of the other key areas of focus for the FPSS program? JR: The FPSS program has also identified high priority challenges in areas of system strength, the management of extreme power system conditions, and the information and tools needed for visibility and control of the future power system. The other members of my team are leading the work on each of these aspects. EU: What was it about the energy sector that attracted you? JR: During my PhD, I became very passionate about addressing climate change. Rather than working on climate science, I felt that I wanted to work on solutions, and renewable energy is one of the solutions available to us. I think we have excellent, cost effective, low carbon technologies available now. The challenge is to work out how to efficiently run a large power system with large amounts of these technologies contributing to the energy mix, such as wind and solar PV, which have very different properties to other technologies. That is why I’m passionate about this program of work. EU: What do you love most about working at AEMO? JR: I love that we are working to understand how we are going to run the grid of the future, and that the best solutions will be implemented in practice. It’s strategic and forward thinking, and will result in real-world applications to deliver cleaner, more cost-effective, and more reliable and secure electricity to all Australians.

Energy Update October 2016


IN BRIEF A WINTER SNAPSHOT OF AEMO’S MARKETS As we head into summer, we take a quick look at some statistics from across AEMO’s gas and electricity markets for winter 2016.

Victorian Declared Wholesale Gas Market (DWGM) • Friday, 24 June 2016 was the peak gas demand day, reaching a total of 1,186 terajoules. • Total winter gas demand for 2016 (from 1 June 2016 to 31 August 2016) was 80.7 petajoules.

National Electricity Market

Western Australia

• The maximum operational demand, that is the highest amount of electrical power used by residential, commercial and large industrial consumers across the National Electricity Market during winter 2016 was 31,785 megawatts (MW), which occurred on Monday, 27 June 2016.

• The Western Australian South West interconnected system (SWIS) reached a peak generation of 3,369 MW on 7 June 2016. Compared to winter 2015, peak total generation has increased by over 6% due to winter 2016 being the coldest winter in Perth in at least 22 years.




Wholesale Electricity Market introduction


9 November 2016

Energy markets: STEM, Balancing and LFAS


16 November 2016

Reserve Capacity Mechanism


16 November 2016

Metrology for the NEM


23-25 November 2016

An overview of AEMO’s gas markets – Short Term Trading Market


28 November 2016

An overview of AEMO’s gas markets – Declared Wholesale Gas Market


2 December 2016

For more details on all courses, and on how to register, visit AEMO’s Learning Centre or call the Information and Support Hub on 1300 236 600.


T E L L U S W H AT Y O U T H I N K AEMO welcomes your feedback. If you have suggestions, comments, or wish to change your contact details, please email


Energy Update October 2016

AEMO Energy Update October 2016  
AEMO Energy Update October 2016  

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