AGL has made a submission to the Australian Energy Market Commission (AEMC) Capacity commitment and Synchronous service directions paper agreeing that a new approach to procure, value, and schedule essential system services in the NEM is needed to ensure efficient timely incentives for the provision of and investment in essential system services. We consider that compensation for essential system services will grow in significance as a factor which drives a generator’s decision to remain, enter, or exit a market. The submission suggests that the AEMC complete further work to consider the viability of the Market Ancillary Services (MAS) approach under which pre-dispatch and dispatch engines would be updated to optimise not only energy and FCAS, but also system security support services. The submission notes that a MAS approach with unbundled technological neutral service-based procurement would be the preferable approach and therefore the AEMC should engage in further industry consultation to consider when such an approach may be viable before moving to a draft determination on the proposed rule change applications.
