The Australian Energy Market Commission (AEMC) said one of the key recommendations is to move the timeframe for when retailers must report to the Australian Energy Regulator on how they have complied with the retailer reliability obligation (RRO) so it is closer to the time of the relevant reliability gap.
This recommendation will make it easier for retailers to determine the level of contracting required to comply with the RRO and will mean retailers can enter contracts with new projects that come online in the lead-up to a reliability gap.
As the electricity market transitions to net zero and more renewable energy sources connect to the system, reliability needs to be carefully managed to meet the needs of households, businesses and industry.
Considering this, we are also recommending the Australian Energy Market Operator (AEMO) has more time to trigger the RRO. This will allow AEMO to assess the evolving nature of reliability gaps throughout the year.
In response to stakeholder feedback calling for further reviews into the efficacy of the RRO, the Commission has also noted that the Commonwealth should consider these areas as part of its work on the future design of the market.
The RRO was designed to encourage new investment in dispatchable energy technologies, essential for the reliable operation of the energy system. It does this by requiring retailers to establish contractual agreements with third parties when AEMO foresees a potential shortfall in energy supply. These agreements are designed to ensure retailers are adequately prepared to fulfill energy demands.
Implementation of our recommendations will necessitate adjustments to various laws, rules, and guidelines. These changes will be subject to due processes and decisions by relevant market bodies and Ministers.
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