Comments on Resource Adequacy in the Australian Competitive Electricity Industry

Resource adequacy is a complex concept in a competitive electricity industry. In principle, end-users should purchase their preferred levels of assurance for future availability and quality of supply in a competitive commercial environment. However, competitive electricity industry design may never become sufficiently sophisticated to support this concept. An interim objective is to design and implement a consistent, efficient and compatible set of regimes for managing security, commercial trading, industry regulation and policy formation. The Australian competitive electricity industry design illustrates this approach and is described and discussed in these comments. Its strengths include a real-time spot market that implements a security-constrained dispatch and is interfaced to a strong security management regime. Its weaknesses include the lack of a formally designed derivative market, excessive reliance on demand forecasting and as yet limited active end-user participation. Its robust performance to date will be tested as temperature-sensitive load grows and greater reliance is placed on non-storable renewable energy fluxes.