National market for instantaneous reserve

On 5 July 2016, Transpower as the system operator sought comment on the way costs will be allocated to generating units holding dispensation under sections 8.19(1) or (3) of the Code. The chosen allocation method will come into force once the National Market for Instantaneous Reserves project is deployed.

Two approaches were being considered and a decision document outlining the chosen approach is available on the system operator’s website.

• Dispensated plant IR cost allocation - Decision pdf

We have decided to defer our decision about amending the Code to alter the way instantaneous reserve availability costs are allocated. Issues raised by submitters lead us to reconsider whether the proposal to allocate instantaneous reserve availability costs on a national basis was clearly more efficient than the existing island-based method of allocation.

Following our reconsideration, we are no longer confident the proposal is more efficient than the status quo. The implementation of a national market for instantaneous reserve will go ahead as planned because it does not appear imperative we amend the allocation before we do so.

Accordingly, we have deferred making a decision on the proposed Code amendment in the short term. Until we have identified a more efficient alternative, availability costs will continue to be allocated as they are now. We will consider more efficient options for allocating IR availability costs under the existing project to review the instantaneous reserve event charge and cost allocation, currently being undertaken by the Wholesale Advisory Group.

The National Market for Instantaneous Reserves project has identified the need to change the way costs are allocated to generating units holding dispensation under sections 8.19(1) or (3) of the Code. Transpower as the system operator is seeking comment on the two approaches being considered.

A short document outlining this can be found on the system operator’s website.

Dispensated plant IR cost allocation [PDF] 

We have decided to request that the system operator enable and use a new facility to share sustained instantaneous reserve across the HVDC inter-island link. Enabling and using such a facility would promote our statutory objective by reducing the quantity of sustained instantaneous reserve procured and increasing competition between instantaneous reserve providers in each island. This initiative is an interim step in the project to implement a national market for instantaneous reserve.

We made our decision after considering submissions on an information paper about sharing sustained instantaneous reserve across the HVDC link, which we published in June 2015.

The system operator will issue a customer advice notice to advise the market of its implementation plans in the next few weeks.

We are proposing the system operator introduces a facility to share sustained instantaneous reserve across the High Voltage Direct Current inter-island link. Enabling and using such a facility would promote our statutory objective by reducing the quantity of sustained instantaneous reserve procured and increasing competition between instantaneous reserve providers in each island.  This initiative is an interim step for the project to implement a national market for instantaneous reserve. 

We have published an information paper seeking feedback on our proposal to enable and use this facility.

Feedback should be received by 5pm on 16 July 2015. 

 The supporting analysis for this information paper can be found on the Authority's EMI website.

The Authority published a decisions and reasons paper as a result of this feedback. 

The Authority has proposed that the system operator make low cost administrative changes to take greater account of the reserve sharing across the HVDC link. These changes would benefit consumers because the system operator would be able to procure less fast instantaneous reserve in each island, increasing competition between providers and lowering costs.

The Authority has considered submissions on the information paper ‘Interim arrangements for enhanced inter-island reserve sharing’ and decided to ask the system operator to implement changes outlined in the information paper. The system operator plans to implement the changes on 17 December 2014. 

The Authority considers that enabling a national instantaneous reserve market would promote its statutory objective by increasing competition between instantaneous reserve providers in each island. It would also reduce the quantity of instantaneous reserve procured, benefitting consumers by deferring investment in new capacity.  

The Authority published an information paper, seeking feedback on its proposal to make changes that would enable a national market for instantaneous reserve.

Feedback was to be received by 5pm on 17 February 2015.

This initiative is part of the project to implement a national instantaneous reserves market. The interim arrangements will partially account for the enhanced reserve sharing available between the North and South Islands from the new High Voltage Direct Current Link (HVDC) control system. The Authority expects that the costs of providing reserves will be lower as a result of this change.

The Authority invited feedback on the information paper by 20 of July 2014. Feedback could be sent to info@ea.govt.nz with Information paper on interim arrangements for inter-island reserve sharing in the subject line.

 The Authority published a decisions and reasons paper as a result of this feedback. 

The system operator published a final report on the National Instantaneous Reserves Market.