AEMC overhauls grid connection rules to cater for AI, renewables

The Australian Energy Market Commission (AEMC) has been working on a substantial overhaul of the technical requirements for connecting to the national electricity grid, in preparation for future challenges such as the integration of renewables and the demands of AI.

The overhaul includes the recent publication of AEMC’s final determination on ‘Package 1’ of improvements to the National Electricity Market (NEM) access standards, which focuses on making it faster and cheaper for renewable energy generators to connect to the grid.

As a further measure, the Commission has also been developing a plan to address emerging challenges to the grid from new large energy users such as data centres and hydrogen electrolysers. To this end, AEMC is seeking stakeholder feedback on ‘Package 2’, which proposes new requirements for large energy users to ensure power system security.

Both of these packages have been informed by the Australian Energy Market Operator’s (AEMO) review of technical requirements for connection, which involved extensive stakeholder consultation.

AEMC Chair Anna Collyer said the reforms in Package 1 would help accelerate Australia’s energy transition while maintaining system security.

“This is the most significant modernisation of the NEM technical connections standards since 2018, coming at a critical time when the pace of connections needs to accelerate dramatically to meet Australia’s renewable energy targets,” Collyer said.

“With renewable energy projected to triple by 2030 and utility-scale batteries to increase fivefold in the same period, these reforms will help reduce connection bottlenecks while maintaining system security.”

The finalised Package 1 reforms aim to make the grid connection process more efficient by:

• adding more prescription and clarity to technical requirements, reducing costly negotiations;
• better accommodating inverter-based resources like solar, wind and batteries;
• broadening application to synchronous condensers and high voltage direct current (HVDC) links needed for system stability.
   

AEMC said the finalised Package 1 reforms will commence on 21 August 2025, with transitional provisions to minimise disruptions to ongoing connection applications. More information about Package 1 can be found on its project page.

In relation to the Package 2 reforms, Collyer said the rise of artificial intelligence was driving unprecedented demand for data centres in Australia, with some facilities potentially requiring as much electricity as small cities.

“Package 2 proposes new standards to ensure these facilities can respond appropriately during power system disturbances and don’t inadvertently make problems worse during system events,” she said.

The potential need for this type of reform was highlighted by a recent incident in the United States where 60 data centres consuming 1500 MW of power disconnected simultaneously during a system disturbance, compounding grid stability issues.

The Commission is inviting stakeholder feedback on Package 2 by 19 June 2025. For more information, or to provide feedback, visit its project page.

Image credit: iStock.com/ithinksky