Experience with Market-Based Ancillary Services in the Australian National Electricity Market

Electrical energy is transmitted from supply-side equipment to end-use equipment almost instantaneously and in accordance with physical laws. This is facilitated by the deployment of ancillary services that maintain the availability and quality of the electricity being supplied, thereby reducing the likelihood of an expensive supply interruption. Ancillary services play an important role in restructured electricity industries because they enable the commercial transactions of an electricity spot market to be implemented. In order to establish competitive arrangements for the sourcing, pricing, deployment and cost- recovery of ancillary services, issues including the formal specification of the services, the design of commercial decision-making mechanisms and the implementation of interfaces between commercial and technical processes must be addressed. This paper describes how these issues are addressed in the Australian national electricity market, reviews the outcomes to date and assesses the strengths and weaknesses of the arrangements.