The NEM is seeing an extraordinary change in market structure so market arrangements must change as well. Primary Frequency Response (PFR) is a service that has been long provided free by thermal generators, but they have been withdrawing from narrow band operation over the past 5 years or so, leading to unstable system operation. While mandatory provision of PFR has recently been approved by AEMC as an interim measure, as the mandatory rule expires and as synchronous generators retire, we must seek new ways of incentivizing PFR keep the system functioning in a secure state at low cost.
In research projects commissioned by CS Energy, consultants at IES have explored a market mechanism that would effectively and efficiently pay for the provision of PFR while also charging those that would cause frequency disturbances. This mechanism has been designed to be similar to causer pays for regulation but would fill a gap that current AGC regulation does not provide for. We call it double sided causer pays.
For a detailed explanation of the method, continue to the Technical Summary page from the navigation bar to the right. You can also find related IES reports there, including reports on work commissioned by CS Energy as well as the 1999 work for NEMMCO on who should pay for ancillary services, and how.