Updating Short Term PASA
Fast Facts.
The short-term projected assessment of system adequacy (ST PASA) is used by the Australian Energy Market Operator (AEMO) to forecast reliability and security conditions over a seven-day planning horizon. These forecasts are primarily used by AEMO and generators to inform short-term operational decisions.
AEMO requested a rule change to establish a principles-based approach to the ST PASA process. Specifically, AEMO sought to remove from the National Electricity Rules (Rules) the significant prescription over the ST PASA framework and transfer responsibility for establishing key requirements to AEMO, as informed by stakeholder consultation.
AEMC amended the rules such that ST PASA is now linked to the “PASA objective”; and introduces principles, aligned to that objective, to guide AEMO administration of the process.
The objective of the change is to enable AEMO to more flexibly realise change in the ST PASA framework for the benefits of AEMO and participants, whilst ensuring that market participant perspectives are appropriately and formally considered. The changes also benefit market participants who will gain access to more meaningful short-term outputs through the process.
The rule change allows a long lead time of over three years due to AEMO implementation complexities. The following implementation milestones will apply:
Publication of ST PASA procedures by AEMO – 30 April 2025
Rule commencement – 31 July 2025.
Background
What is the ST PASA?
The PASA is prescribed under the National Electricity Rules (NER) as being, “a comprehensive program of information collection, analysis, and disclosure of medium-term and short-term power system security and reliability of supply prospects so that Registered Participants are properly informed to enable them to make decisions about supply, demand and outages of transmission networks in respect of periods up to 2 years in advance (or up to 3 years in advance, where specified).” Notably, the rule change now designates this as the PASA objective.
Medium term PASA (MT PASA), involving the weekly collection and assessment of 36- and 24-month data, is also administered by AEMO, but is out of scope of this Rule change.
ST PASA forecasts, comprising a range of information, must be published at least daily by AEMO for the forthcoming week, with a 30-minute period resolution. In reality, the information is published hourly. While AEMO makes its own inputs into the process, it is also reliant on information provided by Scheduled Generators and Market Participants regarding their “current intentions and best estimates” of available capacity, energy availability of energy constrained units; and physical plant capability available on 24 hours’ notice.
Why change the ST PASA?
AEMO requested Rule amendments to the ST PASA framework on the basis of its limited ability to flex in response to market changes due to the extent of NER prescription and the requirement for standard Rule change processes to effect change. Further, a number of NER provisions and definitions were outdated, being inconsistent with current and best practice.
In parallel with the Rule change, AEMO is reviewing current ST PASA processes and systems in consultation with market participants. This is being driven by limitations of the current ST PASA system to accommodate a shift in technology, specifically where energy storage, variable renewable energy, demand response and distributed energy resources (DER) play an increasingly significant role. For example, the existing ST PASA system is limited in its ability to model new technologies, processes, and unusual events such as system separation events; and to account for availability of essential system services like frequency control ancillary or inertia services.
Key Issues
The AEMC has determined a range of amendments to be made to the ST PASA framework established by the Rules, largely in accordance with AEMO’s original Rule change proposal.
Shift to a principles-based ST PASA process
A key change is in linking the ST PASA framework to the “PASA objective” and introducing principles aligned the ST PASA objective to guide AEMO in its administration of the process. This is an important change as it shifts decision making regarding key elements of the STPASA from AEMC to AEMO, thereby enabling agile and timely response to market changes.
Stakeholders were broadly supportive of this approach, on the basis that AEMO be required to develop and publish ST PASA Procedures per the formal Rules consultation procedures; and that the consultation procedures establish various information, process and timing requirements on AEMO. This approach is intended to ensure that stakeholders have the opportunity to meaningfully contribute to the design of the ST PASA procedures and that AEMO take these perspectives into account and provides rationale for its ultimate approach. Further, participants supported the requirement that AEMO must consider the benefits and costs information requirements on participants.
Enhanced granularity of outputs
Another important change is the requirement for AEMO to publish capacity forecasts and ST PASA availability with enhanced granularity, that is at the individual unit level rather than the aggregate regional level for generating plant, WDR units, scheduled loads and scheduled NSPs. The key driver for this change is to address information asymmetry between participants with large versus small generation portfolios. For example, to provide enhanced transparency into technology types, treatment of energy constrained resources and the impact of constraints on market conditions.
Other amendments
Other amendments were made to the ST PASA framework. These included:
Enabling AEMO to consult with participants on information input and output requirements;
Specifying that ST PASA covers at least the seven trading days from and including the day of publication, combining Pre-Dispatch PASA and ST PASA;
Enabling AEMO to publish the ST PASA with a granularity of less than 30 minutes;
Redefining “energy constraint” to also reference load constraints, and remove references to specific constraints that may apply e.g., fuel; and
Redefining “PASA availability” to remove the 24-hour recall period from the definition and instead allow this to be established by AEMO.
AEMC-stated benefits of the Rule change
One of the key benefits of the Rule change, as identified by the AEMC, is that it promotes reliability and security at lowest cost, providing AEMO flexibility to update inputs and published outputs and providing access to enhanced information as the market evolves. It also minimises administrative compliance requirements and costs; and promotes efficient facilitation of broader reform program, with future changes able to be more expediently made.
Our Insights
Participant benefits of a more granular view of ST PASA outputs
Unit-level information will enable participants to draw more meaningful conclusions through greater visibility into availability by technology type and by location, meaning that participants are able to review operational decisions on the basis of more valuable information. For example, a solar generator may elect to perform or defer maintenance activities based on assessment of the availability of competing solar generators, either making use of high availability to schedule maintenance, or taking advantage of low competing availability, by deferring these activities in the short-term. This may become increasingly relevant for generators that are co-located in network locations characterised by low system strength or behind a network constraint.
Alternatively, a battery energy storage system may be able to better assess timing for storing excess power and maximising its release during periods of low availability. As technology develops, big batteries may be able to provide system strength services, and an understanding of unit level availability of synchronous generators will be key to managing storage to effectively provide this service.
Consistent with AEMO’s position, enhanced granularity will be a particular benefit for smaller players given that in each NEM region, a few large participants control a significant proportion of generation. The portfolios held by these larger players mean that existing regional-level ST PASA outputs provide more insight when augmented with data from across the portfolio, a benefit that small players lack. For example, the largest participants account for over 60% of output in each of the NEM regions except South Australia, representing a significant overall information advantage when making unit-level decisions.
Flexibility of ST PASA to market transition
Both AEMO and participants stand to benefit from a more agile framework for effecting ST PASA changes. Significant market transition, characterised by the retirement of carbon-intensive generation and the uptake of renewables, storage and demand side participation, will likely have implications for AEMO’s ability to operate the NEM. Throughout the transition participant needs will evolve in terms of what ST PASA outputs they value and what will best inform operational and commercial decisions. Enhanced decision-making by participants creates efficiency and may in turn benefit AEMO by reducing the need for AEMO to intervene to address power system security or reliability issues.
Broader agility to market changes
Given the extent of transition on the horizon, the application of a principles-based approach to regulation, supported by AEMO Procedures developed through industry consultation, may become more frequently sought by both AEMO and its stakeholders. This can enable flexible responses and, application of best practice procedures, processes and frameworks, to uncertain markets, both in the NEM and gas markets governed by the National Gas Rules.
Participants may stand to benefit from the ability to more directly lobby for change with AEMO rather than through the formal AEMC Rule change process. That is, participants may be able to gain support of other similarly positioned participants, and make a case for change with AEMO, potentially leveraging one of its many reference groups. While AEMO would be required to run a formal consultation process, on balance this is a potentially more expedient and assured method of effecting practical change, assuming the goals are well supported and are aligned with the energy market objectives.
Another beneficiary of a move to this principles-based approach is the AEMC, given the volume and complexity of regulatory change on its horizon. The option to effectively delegate more technically oriented, or rapidly evolving, decision-making to AEMO will free AEMC resources for other reforms.
For more information, contact Simone Rennie at srennie@renniepartners.com.au
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