Electricity market norms vs power system norms: the example of Primary Frequency Response in the Australian National Electricity Market

Abstract

This paper explores the question of whether the introduction of competition into electricity industries may have unintended consequences as ‘market norms’ supplant existing regulatory, institutional and social ‘power system norms’ that support secure and reliable operation of the electricity industry. We draw on the particular challenges that the Australian National Electricity Market is having with primary frequency response (PFR) after mandatory requirements were replaced with market based Frequency Control Ancillary Services (FCAS). It appears that market participants continued for a time to provide PFR even when not being paid to do so in these FCAS Markets. However, recent years have seen generator governors being updated to remove this free PFR, with adverse impacts on system frequency control. Efforts now to reintroduce mandatory PFR are seen by some market participants to be working against the market arrangements that provide revenue for such services. The implications of market norms replacing power system norms within restructured electricity sectors do not appear to have received sufficient attention in Australia or elsewhere.