Insights on designing effective and efficient frequency control arrangements from the Australian National Electricity Market.

For restructured electricity industries undergoing energy transition, designing effective and efficient frequency control arrangements is a complex and ongoing task that requires appropriate configuration of controllers, generator technical connection requirements, market arrangements and wider policy settings. In this paper, we provide an overview and assessment of these arrangements in Australia's National Electricity Market - a useful case study given its long-standing frequency control ancillary services markets, yet recent challenges in maintaining secure frequency control. We assess the performance of these evolving arrangements in delivering improved frequency control outcomes, with particular regard to growing renewable penetrations and evident tensions between mandatory requirements and market-based incentives. Based on this assessment, we draw out four key insights on designing frequency control arrangements as power system capabilities and needs change: (1) Understanding control action interactions, (2) Implementing efficient price formation and cost-allocation mechanisms, (3) Monitoring and assessing service provision to better align participant remuneration with service quality, and (4) Considering both regulatory and market mechanisms and their consequences and interactions. In particular, we discuss the trade-offs between effective and efficient outcomes, and provide arguments for more robust and forward-looking frequency control arrangements during energy transition. • Deteriorating frequency control has been observed in the Australian power system. • Market-based mechanisms have been favoured at the expense of effective control. • Both regulatory and market-based mechanisms will be required during transition. • Regulatory mechanisms may prove to be more effective and robust. • Market design can support investment and align remuneration with performance. [ABSTRACT FROM AUTHOR]