Independent Review into the Future Security of the National Electricity Market Blueprint for the Future, Jun 2017

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1.4 Conclusion

AEMO, market participants and governments are working together to ensure that consumers continue to receive a reliable supply of electricity for the FY2018 summer. However, it is not possible to prevent or mitigate all impacts from extreme weather events or major equipment failure. The impacts of such events may be reduced through summer preparedness measures, ongoing monitoring, and innovative solutions. A more resilient NEM is crucial to restoring electricity supply as soon as practicable in the event of a disruption.

Going forward, the recommendations outlined in this blueprint provide a framework for governments to assure all Australians a secure, reliable and affordable power supply.



Security is a measure of the power system’s ability to continue operating, even in the event of a disturbance such as the unexpected loss of generation or load. With increasing penetration of variable renewable electricity generators, the rules and market frameworks must be revised to ensure essential security services can be sourced from a range of technologies. It is also necessary to ensure that new generators have appropriate capabilities.

The Panel recommends the implementation of a set of Energy Security Obligations to ensure generators have appropriate technical capabilities, including in relation to changes in frequency and system strength. The Panel also makes recommendations around other challenges for system security, including black start capabilities and integrating distributed energy resources.

The environment in which the NEM operates is also changing. As the future grid evolves it will continue to be vulnerable to multiple risks from both natural and human hazards. The Panel makes recommendations around how governments, the energy market bodies and the electricity industry should ensure appropriate risk management strategies are in place to improve the resilience of the NEM.

2.1 New challenges need new approaches

Australia is dependent on a secure, reliable and affordable electricity supply for economic growth and maintaining our modern lifestyle. From telecommunications and finance to transportation and emergency services, every aspect of our daily lives relies on electricity supply. Electricity is also critical for maintaining Australia’s national security, including our defence capabilities.

There are growing concerns about power system security.32 The NEM was designed in the 1990s when large centralised generation (coal, gas and hydro) supplied almost all electricity. The operational parameters for power system security were developed around the characteristics of these generators. However, in the last decade the NEM has seen a significant increase in variable renewable electricity (VRE) generation from wind and solar photovoltaic, and a decline in traditional coal and gas-fired generation.

Increased penetration of VRE generators requires new means to be introduced to address the reduced availability of essential security services that historically have been provided by fossil fuel and other synchronous generators. In addition, the connection standards for new generators must ensure that their capabilities and settings are appropriate. This includes technical requirements such as frequency control, voltage control, and response to power system disturbances. Other challenges for power system security through the energy transition include black start capabilities and integrating distributed energy resources.

There are technical solutions to address many of these issues and ensure that power system security meets community expectations. International experience suggests that delivering a secure power system with a high VRE penetration is technically and economically feasible,33 while a number of studies have found that there are no technical barriers to a high VRE penetration in the Australian context.34 It is important that there are efficient and equitable approaches for providing security services, and capturing their benefits. Work is already underway by AEMO and the AEMC in this regard. Solutions must be implemented on a region-by-region basis, so that costs and needs are balanced.

A secure power system is a necessary condition for a reliable supply of electricity to consumers. Chapter 3 will address broader reliability concerns.

As the future power system evolves, it will continue to be vulnerable to multiple risks from both natural and human hazards. These include emerging national security risks such as cyber attacks, the possibility of more frequent and intense extreme weather events, and shortfalls in certain workforce skills.

While energy businesses are generally well advanced in responding to weather events, emerging risks may not be as predictable or as amenable to traditional risk management strategies. It is crucial for governments, energy market bodies and the electricity industry to enhance their engineering, technical and ICT capabilities. In addition, ensuring appropriate risk management strategies are in place will improve the resilience of the NEM.

Box 2.1 – Definitions


Security is a measure of the ability of the power system to tolerate disturbances and maintain electricity supply to consumers. Security is achieved by operating the system in a satisfactory and stable operating state and within the required bounds of a number of technical parameters such as frequency, voltage, fault current levels, and the operation of equipment within its design limits.

For example, the unexpected disconnection of a large generator or load can cause frequency deviations outside the normal range, leading to a rapid rate of change of frequency and resulting power system instability. This can then lead to cascading failures and ultimately even a “black system” where a significant part of the power system experiences a failure of the electricity supply.


Reliability is a measure of the ability of generation and transmission capacity to meet consumer demand. Having adequate supply to match demand at all times raises new challenges and opportunities in a future with high proportions of VRE generators, and where generation and storage is distributed rather than centrally dispatched. Reliability is quantified as the proportion of total electricity demand that is not delivered.

A secure power system is a necessary, but not sufficient, condition for reliability.


Stable frequency is a measure of the instantaneous balance of power supply and demand. To avoid damage to, or failure of, the power system the frequency may only deviate within a narrow range below or above 50 cycles per second (hertz), as prescribed in the frequency operating standards for the NEM.

When there is a mismatch between supply and demand the frequency will change. The rate of change of frequency (also known as RoCoF) is the measure of the speed at which the frequency deviates from 50 hertz.

Physical inertia

Physical inertia from synchronous machines plays an important role in slowing the rate of change of frequency when there is a mismatch between supply and demand, allowing time for frequency control mechanisms to respond.

Areas within the network operate at different voltages, ranging from high voltage transmission lines to low voltage distribution networks.

Voltage control is important for the proper operation of electrical equipment and to reduce transmission losses. Alternating current (AC) power systems control voltage by managing the production and absorption of reactive power.

Essential security services

Essential security services are synchronous inertia, system strength and voltage control. Synchronous generators provide all these essential security services. As thermal synchronous generators retire new sources of essential security services will be required. In the future, batteries with specially designed power converters will be able to provide voltage control. Synchronous condensers can provide all essential security services.
System strength

System strength is defined by how localised sections of the system react in the event of a fault (an abnormal flow of electrical current, such as a short circuit). System strength is usually measured by the available fault current at a given location.

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