Interim arrangements for utility scale battery technology

Introduction
Purpose
This document has been prepared to expedite the entry of utility scale battery projects to the NEM in
the short term. It sets out AEMO’s views on how to apply the current National Electricity Rules (NER)
to battery projects, recognising that there may be scope to improve the NER framework going forward.
The document describes interim arrangements to apply in a number of key areas including
registration, metering, SCADA, negotiation of generator performance standards (GPS) and
engagement with Network Service Providers (NSPs). Further context is also provided through
example questions and answers.
AEMO will assess the conditions for connection, registration and operation of battery energy systems
on a case-by-case basis in accordance with the NER.
Background
AEMO is working to support a number of processes underway to trial the potential of battery
technology to provide a variety of power system security and reliability services.
The NER can accommodate batteries and other energy storage providers, but it is not always clear
how a battery fits within the current framework. A number of inquiries have been received by AEMO
from proponents of network-connected battery storage projects who have requested information
relevant to installation and operation of both standalone battery systems as well as battery systems
installed with new or existing generation. This document provides guidance on AEMO’s view on how
the NER can be applied to utility scale batteries in the short term, pending an investigation into the
security and reliability service potential of the technology.
Interim arrangements to inform review of Rules framework applying to energy storage
While the comments detailed in this document reflect the existing NER, AEMO considers that there
may be scope to improve the NER as they apply to batteries (and potentially other forms of storage).
AEMO intends to work with stakeholders, international experts and the AEMC to review our
experience under the current framework and assess whether there is scope for improvement.
AEMO will conduct its review over the next 12 months. The experience that AEMO and other
interested parties gain under the interim arrangements will be invaluable in developing comprehensive
and robust long term arrangements. While this is underway, we suggest that the current arrangements
could transition to a new framework if and when the changes to the NER are introduced.

Overview of interim arrangements

Registration
AEMO’s policy is that proponents of battery systems with an aggregate nameplate rating greater than
or equal to 5 MW, whether directly connected to the network or integrated behind the meter with new
or existing generation are to be registered as both Generators and Market Customers. Their
generating units should be classified as scheduled and market, and the load classified as scheduled
load. In the case of a generating system with a battery that is integrated with another type of
generation and will never be charging from the grid, AEMO will consider a proposal that the proponent
not register as a Market Customer, provided that appropriate arrangements are put in place for the
charging activity to be dispatched through central dispatch for reasons of power system security and
operation.
AEMO has recently updated its ‘Classification and Exemption Guide’ and ‘Generator Registration
Guide’ to reflect this.1
Metering
As with any other new or modified generation project, AEMO will assess proposed metering
arrangements on a case-by-case basis for battery energy systems. Stakeholders should consider the
following principles when developing a proposal for generation and load for a battery system of 5MW
or greater:
 Parties must register a metering installation with AEMO prior to being able to operate in the
NEM.2
 Battery systems may be connected through one, two or more connection points to the
network. A NER-compliant metering installation will be required for each connection point.3
 Parties considering a single connection point for charge and discharge of the battery system
must ensure that there is a single Financially Responsible Market Participant (FRMP)
registered for that connection point.4 Consideration should be given to the need for individual
meters for battery charge and discharge, based on whether batteries are expected to be both
charging and discharging in a given 5-minute dispatch period (e.g. for provision of contingency
Frequency Control Ancillary Services5 (FCAS)).
 Multiple (i.e. two or more) connection point arrangements for charge and discharge can be
accommodated by a NER-compliant metering installation but are likely to require additional
switching and metering infrastructure. In the case of multiple connection points, separate
FRMPs can be classified for charge and discharge connection points.
 Parties looking to generate large scale generation certificates (LGCs) for the purposes of the
Renewable Energy Target should give consideration to requirements for creating and
validating LGC claims when developing a proposal for a NER-compliant metering installation.6
 The use of ‘logically calculated’ metering arrangements (i.e. metering inferred via calculation
of power flows through balance of plant or other ancillary systems) may be considered by
AEMO, but they do not replace the need for NER-compliant metering installations. Logical
metering arrangements must be approved by AEMO.
SCADA and data collection
Secure and reliable operation of the power system is only possible if the necessary energy and
system services required by the NEM can be accurately forecast and dispatched by AEMO, the
system operator.
Battery energy systems have the ability to shift the time at which energy produced from renewable
sources is consumed. For this reason, AEMO’s systems for forecasting generation of wind energy (i.e.
AWEFS), solar energy (i.e. ASEFS) and underlying demand will have to take in a level of real-time
information on how battery systems are interacting with other generation assets.
The power system must be operated within its technical limits at all times; in order to understand the
envelope of the power system technical capability in real-time, AEMO will need to have a basic
understanding of the ability of battery energy systems above the registration threshold to provide
system services.
Battery systems that have a nameplate rating greater than or equal to 5 MW will have to provide to
AEMO via SCADA:
 Current state of charge in MWh

1 http://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Participant-information/New-
participants/Exemption-and-classification-guides
2 See NER 7.1.2.
3 See NER 7.3.1A.
4 See NER 3.15.3.
5 For further general information on FCAS refer to:

https://www.aemo.com.au/-/media/Files/PDF/Guide-to-Ancillary-Services-in-the-National-Electricity-Market.ashx
6 For further information refer to the Clean Energy Regulator:

http://www.cleanenergyregulator.gov.au/RET/Scheme-participants-and-industry/Power-stations/Large-scale-
generation-certificates/Creating-and-registering-large-scale-generation-certificates
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  Current charge rate in MW
 Current discharge rate in MW
 Any other data required under their generator performance standard
 Any other data required by the Market Ancillary Services Specification (MASS) if operating in
FCAS markets.
Parties that are considering provision of FCAS must register accordingly and should ensure that
suitable equipment is installed to monitor and record the response from generating units in
accordance with the requirements of the MASS.
Engagement with NSPs
Parties interested in connecting a battery energy system should approach their relevant NSP in the
first instance to discuss the feasibility of their proposal and the process for investigating possible
connection options. AEMO will provide support to each NSP as required by existing processes used to
establish a new connection for a generating system or modify an existing network connected
generating system.7
As a part of the established process for new connections, following lodgement of a connection enquiry
with the relevant NSP, applicants will:
 assess feasible locations for connection of the proposed generating system;
 negotiate a suitable design for ancillary infrastructure required at the connection location in
accordance with obligations of the connection applicant and the NSP under the NER;
 propose a set of GPS to the relevant NSP that detail the level of technical performance
required for on-going operation of the battery system (as both a scheduled generating
system and scheduled load in this case).
The performance standards that will apply to the battery system will be based on the relevant access
standards and the results of simulation studies where batteries are both charging and discharging.
AEMO’s role in this connection process is providing data as required to connection applicants and
undertaking modelling and due diligence to support assessment of the GPS proposed by the
connection applicant.
TUOS and DUOS
Under the NER, it is the responsibility of NSPs to negotiate in good faith with connection applicants on
network ‘Use of system’ charges (i.e. TUOS for Transmission NSPs (TNSPs) and DUOS for
Distribution NSPs (DNSPs)) and other connection service charges.
Intending participants should discuss the process for the negotiation of ‘use of system charges’ with
the relevant TNSP/DNSP consistent with principles set out in the NER. Each NSP determines ‘use of
system’ charges according to its own pricing methodology.

In Victoria, AEMO is responsible for setting TUOS charges as part of its Victorian TNSP role. In the
absence of a clear regulatory framework, AEMO is liaising with the AER in order to establish an
appropriate way forward. There would be merit in amending the Rules to clarify this issue.
Participation in ancillary services markets
Parties looking to participate in FCAS markets must comply with the requirements of the MASS8 and
register as generators appropriately as ancillary service generating units.
Although the current version of the MASS has not been written to explicitly consider arrangements for
Fast Frequency Response (FFR) services, section 7.3 of this document provides a basis for AEMO to
undertake trials to test the performance of new technologies with registered ancillary service

7 Refer to connection process overview for more information:

https://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Network-connections/Transmission-and-
distribution-in-the-NEM--process-overview
8 Further information on the MASS, which is currently under consultation, is available here:

https://www.aemo.com.au/Stakeholder-Consultation/Consultations/Amendment-Of-The-Market-Ancillary-Service-
Specification

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generating units. There may also be scope to demonstrate the ability of different technologies to
provide FFR services as a part of the AEMC’s rule change process on Inertia Ancillary Services
Markets, which is currently under development. 9The AEMC has recently set out its intention to
establish a Frequency Control Frameworks Review to explore how a framework for FFR services
might operate.10 AEMO encourages all interested stakeholders to maintain a watching brief on this
review as the FFR framework is developed.
There may also be scope for battery energy systems to provide network support and control services
to a TNSP, or in certain limited circumstances, to AEMO. The applicable regulatory framework is
described in the AEMC’s final determination on network support and control ancillary services
(NSCAS).11
Contacts for further information
 For further information on how to connect to the NEM please contact AEMO’s connections
team:
[email protected]
 For further information on the registration process, please contact AEMO’s onboarding team:
[email protected]
 For further information on any other specific issue please contact the AEMO support hub:
[email protected]

Frequently Asked Questions

REGISTRATION - STANDALONE INSTALLATIONS
If I install a 5MW battery, must I apply for registration?
Yes. AEMO has determined that any battery of 5MW capacity or more has the potential to impact
power system security and requires that a person engaged in generating electricity using such a
battery must be registered in the NEM. For further information, see AEMO’s Guide to Generator
Exemptions & Classification of Generating Units.

Why isn’t the battery load considered to be an auxiliary load?

Although there is no standard definition of ‘auxiliary load’, AEMO uses the term to denote the
components of a generating system that consume electricity to provide operational assistance to
generating units, especially where this may support maintenance activities or assisting the generating
system to come online. Batteries that are less than 5MW may be considered to be auxiliary load.

REGISTRATION - INSTALLATIONS AS PART OF AN EXISTING GENERATING SYSTEM

If I install a 100MW battery as part of an existing market generating system, must I apply to
register as both a Generator and a Customer?
If the battery energy system has a nameplate capacity (individually or in aggregate) that is greater
than or equal to 5MW, then the simplest approach is to register the battery separately to the existing
market generating system as both a Generator and a Market Customer, classified as Scheduled. In
this scenario, the battery energy system would operate as a separate unit behind the existing point of
connection. However, AEMO will consider alternative proposals that do not compromise the reliability
or security of the power system.

9 On 27 June 2017, the AEMC extended the period of time for making the draft rule determination for this rule
change request until 7 November 2017.
10 http://www.aemc.gov.au/Markets-Reviews-Advice/Frequency-control-frameworks-review
11 http://www.aemc.gov.au/Rule-Changes/Network-Support-and-Control-Ancillary-Services

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REGISTRATION – CLASSIFICATION
I am planning on installing a 5MW battery installation. Why does it have to be scheduled?
As a battery can change its output virtually instantaneously, even a 5MW battery can have an impact
on power system security and reliability. AEMO will need timely and accurate information about when
and how a battery is to be charged or discharged. The systems that are in place for scheduled
generating units and scheduled loads facilitate the provision of this information to AEMO.

Is a battery installation considered to be intermittent generation and can it be classified as

semi-scheduled?
No. The NER definition of ‘intermittent’ requires that the output not be readily predictable. Battery
storage installations are expected to be controlled, so they don’t meet this requirement.
Hence, a battery installation cannot be classified as semi-scheduled.
The situation becomes complicated if you are proposing to install battery storage within an existing
semi-scheduled generating system. This would require a reconsideration of the classification of the
whole site. AEMO may consider that the combined installation will be reclassified as scheduled, but
will make this determination on a case by case basis.

METERING & SETTLEMENTS

I am proposing a single NMI for my generating system and battery storage. Is this acceptable?
The FRMP is responsible for ensuring that each connection point has a metering installation and a
NMI (See NER 7.1.2(a), 7.3.1A(a) & 7.3.1(e) regarding NMIs, and NER 3.15.3 for financial
responsibility).12
MSATS, which is AEMO’s market settlements system, will only accept a NMI Classification Code of
load or generator. It cannot be both. Hence, if the battery and generating system are using the same
connection point, they can have the same NMI for both charging and discharging only if it is classified
under NER 3.15.3(a) as a generation connection point for settlement purposes.

Do I need a physical metering installation at my connection point?

Yes, you need to have an NER compliant metering installation at each connection point. AEMO may
consider the use of “logical metering” algorithms, but they do not replace the need for NER-compliant
metering installations. Logical metering arrangements must be approved by AEMO.

PERFORMANCE STANDARDS
What performance standards will be required?
Performance standards will be required for installations where the aggregate nameplate capacity (total
instantaneous peak capacity) is 5 MW or greater.
If installed as part of an existing generating system or Customer connection, and there are changes to
the existing plant and/or performance of the existing plant, there will be requirement for AEMO and the
relevant NSP to approve settings/configuration changes and revised performance standards. Relevant
NER clauses are:
 5.3.4 – Application for connection
 5.3.4A – Negotiated access standards
 5.3.9 – Procedure to be followed by a Generator proposing to alter a generating system
 S5.2.2 – Application of Settings
The Generator Performance Standard template will apply as the starting point for performance
standards, with some modifications to reflect the capability of the battery to operate as both a

12The Chapter 7 references will change from 1 Dec 2017, but the principles will be the same, with the exception
that the Metering Coordinator will assume responsibility for the metering installation. NER 7.1.2(a) becomes
7.2.1(a), 7.3.1A(a) becomes 7.8.1(a) and 7.3.1(e) becomes 7.8.2(d).
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‘generator’ and a ‘load’. The maximum operating level is the peak instantaneous generating capability
of the battery, and minimum operating level is the peak instantaneous absorption capability of the
battery. The performance requirements relating to reactive capability and dynamic response will
equally apply for both 'generator' and 'load' operating modes. Additional provisions may apply, such as
S5.3.10, and other performance requirements by agreement (e.g. Fast Frequency Response).
Additional requirements may apply, and be reflected in the performance standards, based on specific
requirements (e.g. ESCOSA requirements).
For details of AEMO’s information, modelling and testing requirements, refer to the AEMO website or
contact [email protected].

OPERATIONAL ISSUES
How will AEMO’s systems deal with dispatch bids for a Scheduled Load and offers and
generation bids for a Scheduled Generator?
NEMDE will dispatch both, regardless of whether the bids/offers are inconsistent with each other.
It is up to the Market Participant to ensure that their bids/offers reflect their intentions.

Would AEMO impose any ramp rate restrictions on a battery? If so, would they be
implemented as a registration condition or a constraint equation?
It depends on the size of the battery. If it were significant to have an impact on power system security,
the fact that they can respond in less than a second to a price spike/fall would have a similar effect on
the power system to a contingency event. This is particularly the case if a number of different batteries
were to all respond in a similar manner in response to a change in price. AEMO has the power under
NER 4.9.5(a)(3) to set a ramp rate limit that a generator must follow when moving to a new dispatch
target. These ramp rate limits can be implemented through NEMDE in the dispatch process. Such
ramp rate limits would not apply to the provision of contingency FCAS or NLCAS, where a more rapid
response can be of value to the power system.

ANCILLARY SERVICES
What do I need to do to be able to provide ancillary services using my battery?
The provision of market ancillary services depends on whether you can demonstrate compliance with
the Market Ancillary Service Specification.

Would testing for FCAS, Fast Frequency Response etc. be similar to conventional generation?
The Market Ancillary Service Specification describes a process for testing the response of generating
systems for the existing 8 FCAS markets. There is currently no formal market structure for ‘Fast
Frequency Response’ (FFR) services, although the AEMC is set to release a draft determination on 7
November 2017 on the Inertia Ancillary Services Market Rule.
New arrangements for inertia markets under consideration by the AEMC include a potential
mechanism for NSPs to contract FFR services to act as a substitute for inertia where AEMO and the
NSP agree that this approach will meet system security obligations. AEMO expects that there will be
opportunities to undertake proof-of-concept testing of FFR type services over the medium term to
inform new market arrangements. The objective of this proof-of-concept testing will be identify suitable
technical parameters and market features for a FFR specification(s) that could be applied more
broadly in the NEM.
These issues will be considered more holistically as a part or a review of the framework for frequency
control. The Terms of Reference for AEMC’s Frequency Control Frameworks Review published on 7
July 201713 indicate that the recommendations of the Review may include proposed revisions to
technical standards, refinements to existing FCAS markets, the establishment of new markets or other
changes to the regulatory and market framework. The broader set of issues relating to how FFR
should be included in existing or new market arrangements will be considered by AEMC in this

13 http://www.aemc.gov.au/getattachment/900f37e2-efa4-4c7f-99ea-fa9c78b41993/Terms-of-reference.aspx

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Review. AEMO will be collaborating with the AEMC to inform the findings of the Review and will
channel input from the Ancillary Services Technical Advisory Group 14 to support thorough assessment
of potential new arrangements.
See the AEMC’s website for further information at:
http://www.aemc.gov.au/Markets-Reviews-Advice/Frequency-control-frameworks-review

TRANSMISSION/DISTRIBUTION USE OF SYSTEM CHARGES

How will TUOS/DUOS be charged?
This is a matter that should be referred to the TNSP/DNSP who owns the network to which the
applicant is proposing to connect its battery.
In Victoria, applications for connection to the transmission network are directed to AEMO. In the
absence of a clear regulatory framework, in the exercise of its Victorian Transmission function, AEMO
is liaising with the AER to establish an appropriate way forward.

PARTICIPANT and REGISTRATION FEES

What kind of participant fees are payable by Registered Participants with battery storage?
Different charges apply to Generators and Market Customers. Interested parties should view AEMO’s
current fee schedule on AEMO’s website, available at:
http://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Participant-information/Fees-and-
charges.

Where do I find details of participant fees on AEMO’s website?

You can find it in the ‘About AEMO’ section. The link is here:
http://www.aemo.com.au/About-AEMO/Energy-market-budget-and-fees

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https://www.aemo.com.au/Stakeholder-Consultation/Industry-forums-and-working-groups/Other-
meetings/Ancillary-Services-Technical-Advisory-Group
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