Project EnergyConnect – Market Integration project

Background

AEMO supports Australia’s complex and rapid energy transformation towards net zero emissions, enabling low-cost fired renewable energy and essential transmission to provide customers in the NEM with reliable, secure and affordable power. ElectraNet and Transgrid are partnering to deliver the 900km long energy interconnector Project EnergyConnect, connecting South Australia and New South Wales with an added connection into Victoria, to deliver a range of direct benefits for consumers including lower power prices and improved energy security.

Project EnergyConnect is delivered over two stages:

  • Stage 1 150 MW bi-directional capacity connection: between Robertstown and Buronga, release from October 2024.
  • Stage 2 Combined transfer limit across Heywood and PEC interconnectors: 1,300 MW import into South Australia and 1350 MW export. Comprises the connection between Buronga and Wagga Wagga. Anticipated full capacity from Q4 2027, with inter-network testing from 1 July 2026.

Once the commissioning of Stage 2 is complete, it will create a parallel transmission configuration between three adjacent regions which presents new challenges for the NEM, especially for the way negative inter-regional settlement residue is managed.

AEMO has undertaken stakeholder consultation on Project Energy Connect Market Integration, with the final recommendations published on 9 February 2024. Further, a Rule Change Proposal was submitted to AEMC on 23 February 2024, seeking to recommend changes to the existing negative inter-regional settlement residue process.

AEMO has established the Project EnergyConnect – Market Integration (PEC-MI) project under the NEM Reform Program to implement resulting system and procedure changes collaboratively with industry.

PEC-MI is delivering market design changes to accommodate Stage 2. This includes: changes to AEMO’s systems, a rule change for negative residue management and relevant procedure changes.

Scope

The addition of PEC fundamentally changes elements of market design, and AEMO’s integration of PEC Stage 2 into AEMO’s systems is designed to:

  • Use the interconnector dispatch integration model
  • Revise existing automated Negative Residue Management constraints
  • Limit the application of interconnector clamping, to when aggregate loop IRSR is negative. This would limit the extent interconnector clamping is a driver of dispatch outcomes.
  • Reallocate negative inter-regional settlement residues when settlement, in aggregate, is in surplus across the three interconnectors for each trading interval.
  • Ensure negative inter-regional settlement residues reallocated are payable by the importing TNSP

The project will also include PEC into the Settlement Residue Auction (SRA).

Industry engagement

This initiative forms part of NEM Reform Program and market participants can get involved by visiting:

Indicative Timeline

Date Element Description

December 2023

Completing the South Australian side of Project EnergyConnect

Construction complete on South Australian side of new electricity interconnector

9 Feb 2024

PEC Market Integration Final Paper

Final Report published following consultation. The Final Report set out the recommended approach to negative residue management and allocation, as well as analysis and comparison of approaches to dispatch integration. It included responses to submissions received

23 Feb 2024

Rule change submitted to AEMC

Rule Change Proposal submitted to AEMC which seeks to address certain market integration issues that would otherwise arise on the commencement of PEC Stage 2, currently expected to be delivered in early 2026

September 2024

PEC-1 Capacity Release

Inter-network testing of Stage 1 is scheduled to begin following construction completion of Stage 1 works on the NSW side by Transgrid

November 2024

Completing the Stage 1 works on the NSW side of Project EnergyConnect

Release of up to 150MW of power transfer capability, subject to successful testing

December 2024

AEMC Draft Determination

AEMC Draft Determination on rule which seeks to address certain market integration issues that would otherwise arise on the commencement of PEC Stage 2

March 2025

AEMC Final Determination

 

March 2025 - August 2025

SRA Rule Consultation (6mths if non urgent)

Including PEC into SRA Rules

April 2025 - October 2025

Procedure changes consultation

Procedure consultation, to accommodate changes to NER 3.6.5 and to be ready for PEC-2

May 2026

PEC 2 inter-network
Testing commences

Inter-network testing of PEC Stage 2 is scheduled to begin following construction completion of PEC

October 2026

Indicative Cut-over to NEW
Settlement Residue
Management system

AEMO’s system changes are completed and ready for PEC-2 Capacity Release

2027

PEC-2 Capacity Release completed

Completion of Stage 2 works on the NSW side of Project EnergyConnect
Release of the full transfer capability of up to 800MW, following Stage 2 construction completion in NSW by Transgrid, subject to Stage 2 inter-network testing

Record of activities

Procedure Changes

AEMO’s Procedures, guidelines and other documents that require changes include:

  • SO_OP_3705 Dispatch Procedure
  • Automation of negative residue management
  • Methodology for the allocation and distribution of settlements residues
  • NEM Transmission Network Service Provider Negative Settlements Residue

Further information

For more information, please contact NEMReform@aemo.com.au.

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