On 14 November 2024, the Australian Energy Market Commission (AEMC) made a more preferable final rule that exempts connection points for batteries, pumped hydro energy storage (PHES) and other forms of storage assets from being liable under the Retailer Reliability Obligation (RRO).
The exemption will improve the security of the national electricity market (NEM) during reliability-gap periods without compromising the policy intent of the RRO.
This decision is in response to the rule change request submitted by proponents Iberdrola, Neoen and Tesla on 8 April 2024 asking to exempt bi-directional units (i.e. batteries) from the RRO. In their rule change request, the proponents argued that the current liability under the RRO creates a trade off for batteries between providing critical security services and risking non-compliance with the RRO, leading to security risks for the NEM during reliability-gap periods.
This decision was shaped by stakeholder feedback to the draft determination, consultation with AEMO and internal analysis on storage behaviour during high-price periods.
In addition to improving the security of the NEM, the exemption will save potential market costs from directions that AEMO would need to issue to storage units due to constraints imposed by the RRO. As a result, this rule change benefits all consumers.
The rule includes amendments to chapter 4A of the National Electricity Rules (NER) and the ‘Unlocking CER Benefits through flexible trading’ rule change.
The exemption will take effect from 3 December 2024.
