The AEMC has made a final determination regarding the five minute settlement and global settlement implementation amendments, in response to a rule change proposal.
In November 2017, the AEMC made a rule to change the settlement period for the electricity spot price from 30 minutes to five minutes, starting in 2021. This fundamental change provides a better price signal for investment in fast response technologies, such as batteries, new generation gas peaker plants and demand response.
It aligns the physical energy system – which matches demand and supply of electricity every five minutes – with the price signal provided by the market for that five minute period.
In December 2018, the AEMC made a rule to introduce a “global settlement” framework for settlement of the demand side of the wholesale electricity market. The global settlement rule moves away from the current “settlement by difference” approach. The global settlement rule will commence on 6 February 2022.
The recent 2019 rule change was considered non-controversial and the AEMC followed an expedited rule making process.
The final rule amends nine areas of the National Electricity Rules.
The changes will:
- Improve wholesale market operations under five minute settlement
- Clarify global settlement arrangements
- Improve information provision requirements.
The final rule is generally consistent with AEMO’s rule change request, but varies in some minor aspects.