AEMC announces final inertia determination

The Australian Energy Market Commission (AEMC) has announced that it will not be creating a new, real-time trading market for inertia. In reaching this decision, the organisation concluded that existing system security frameworks, which it has recently enhanced, are sufficient to manage the grid’s stability efficiently for the foreseeable future.

Inertia is a power system service that acts like a shock absorber, helping to keep the grid stable. It provides resistance to sudden bumps or gaps in electricity supply by slowing the rate of frequency change. For example, when a large generator or transmission line trips out, inertia slows the rate at which frequency declines, providing critical time for other services to respond and prevent a blackout.

Historically, coal-fired plants have supplied the vast majority of inertia to the grid through their heavy spinning turbines. As these plants retire, however, the grid needs new, non-traditional sources, such as synchronous condensers and grid-forming inverters in batteries, to maintain stability.

The AEMC said its evidence-based analysis found that implementing a complex new market for inertia at this time would be a costly, unnecessary change that would not deliver net benefits to Australian energy consumers.

“This is a prudent decision that protects consumers from unnecessary costs,” said AEMC Chair Anna Collyer. “Our analysis shows that under current conditions, the estimated $5–10 million in upfront costs, plus millions more in ongoing operation, would far outweigh the modest expected benefits.

“This is fundamentally about getting the timing right. We have found that the necessary inertia supply is already being secured through work being done to ensure system strength.”

Collyer said that investments in a wide range of assets, including synchronous condensers, gas plants with clutches (allowing turbines to operate as condensers) and grid-forming inverters, are being installed to meet system strength standards, with these assets delivering inertia as a substantial co-benefit at minimal marginal cost to consumers.

“We are not waiting to act. We are acting by ensuring recently made security reforms, which include trialling new technologies and ways of providing system security services, have time to be fully rolled out before we introduce another layer of complexity,” she said.

The AEMC’s determination still allows for the creation of a real-time inertia market if system conditions change. To this end, the body’s Reliability Panel has been tasked with actively monitoring the system to determine when conditions would suggest that operational procurement for inertia could provide benefits.

The announcement was welcomed by photovoltaic and solar storage company SMA Australia, with Darren Gladman, the company’s Head of Energy Policy & Regulatory Affairs, commenting: “The AEMC’s work on inertia is a crucial step towards preparing the grid for a future beyond coal.”

Gladman added that, while inertia was vital for grid stability, system strength was also critical.

“Batteries with grid-forming inverters will play a major role in keeping the system stable in future. Think of grid-forming inverters as the technology that allows batteries to behave more like traditional power plants that provide strength and stability,” he said.

“For this to work, we need proper testing, clear regulations, and proof that these inverters can reliably deliver both inertia and system strength.”

Image credit: iStock.com/industryview