long-form abstract in thesis

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       Abhijith Prakash
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-<p class="date before-toc"><time datetime="April 9, 2024">April 9, 2024</time></p>
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 <h1 class="unnumbered" id="abstract">Abstract</h1>
-<p>Massive deployments of solar and wind generation mean that power systems worldwide are beginning to experience high penetrations of variable renewable energy. Given the challenges and opportunities posed by these resources to the effective and efficient balancing of active power supply and demand in power systems, policy-makers are revisiting the design of power system operational practices such as grid codes, system operator processes and, in jurisdictions with wholesale competition, electricity markets.</p>
-<p>In this thesis, I explore how policy-makers should design operational practices for balancing electricity markets. Because the design process is complex, contested and contextual, I employ an empirical approach that leverages experience from the Australian National Electricity Market (NEM).</p>
-<p>Frequency control services are critical to ensuring that imbalances are quickly addressed. In this thesis, I first explore the features needed in arrangements for procuring frequency control services during energy transition. Through a comprehensive international review and an assessment of the NEM, I offer four insights on designing frequency control arrangements as power systems transition.</p>
-<p>Market-based practices should be assessed to determine whether they can deliver the balancing flexibility required during energy transition. As a first step in this assessment, I investigate how balancing flexibility capabilities in scheduling timeframes are changing during energy transition using historical and projected resource mixes for two regions of the NEM. Based on these findings, I recommend that policy-makers examine how existing arrangements can be augmented to elicit upwards flexibility provision, and that duration specifications and sustained footroom procurement be considered for reserve products.</p>
-<p>Market participants must be willing and able to offer balancing flexibility into wholesale spot markets. As such, I shift to exploring how market knowledge processes and participation rules can be configured to maximise balancing flexibility provision. From an analysis of centralised price forecasts from the NEM, I find that errors in these forecasts are increasing in frequency and severity and, as such, arbitrage revenues can be reduced by 15-60+% should these forecasts be used to guide battery energy storage scheduling. I recommend that policy-makers increase the frequency at which forecasts are published and consider market participation restrictions.</p>
+<p>Decarbonisation requires an unprecedented deployment of variable renewable energy (VRE) in the form of solar photovoltaic and wind generation. As such, power systems worldwide are soon expected to experience, or indeed already experiencing high instantaneous penetrations of VRE. Given that these resources pose challenges but also present opportunities to the effective and efficient balancing of active power supply and demand in power systems, policy-makers worldwide are revisiting the design and configuration of power system operational practices such as grid codes, system operator processes and, in jurisdictions that have introduced wholesale competition, electricity markets.</p>
+<p>In this thesis, I explore how policy-makers should design operational practices for balancing electricity markets given existing challenges and those posed by growing penetrations of VRE. Because the design process is complex, contested and contextual, I employ an empirical approach that identifies flexible and practical design solutions across operational timeframes (i.e. milliseconds to hours) by leveraging experience from the Australian National Electricity Market (NEM), the power system and electricity market that services the vast majority of the country’s electricity demand. The Australian NEM offers an excellent case study given that it regularly experiences high instantaneous penetrations of VRE, is increasingly integrating flexibility solutions in the form of demand-side and energy storage resources, and has transparent market arrangements that include a highly consultative market design process. Though I focus on the Australian NEM, I also provide policy-makers in other jurisdictions with valuable insights drawn from the Australian experience and a framework for approaching the design of operational balancing practices in electricity markets undergoing transition.</p>
+<p>Frequency control services are a critical component to ensuring that imbalances are quickly addressed. In this thesis, I first explore what features are needed in centrally-coordinated arrangements for procuring frequency control services during energy transition. Through a comprehensive international review and an assessment of the Australian NEM’s frequency control arrangements, I offer four insights on designing frequency control arrangements as power system capabilities and needs change: 1) Understanding control action interactions, 2) Implementing efficient price formation and cost-allocation mechanisms, 3) Monitoring and assessing service provision to better align participant remuneration with service quality, and 4) Considering both regulatory and market mechanisms and their consequences and interactions.</p>
+<p>Increased balancing flexibility will be required during energy transition. In wholesale electricity markets, market participation decisions determine the type and quantity of balancing flexibility available within scheduling timeframes. As such, market arrangements should be assessed to determine whether they are purpose-fit to deliver the balancing flexibility necessary to support high shares of VRE. As a contribution to this assessment, I investigate how balancing flexibility capabilities in scheduling timeframes are changing during energy transition. Using a practical method to quantify the time-varying spectrum of upwards and downwards flexibility capabilities of historical and projected resource mixes in two regions of the Australian NEM, I find that with high penetrations of VRE: 1) downwards flexibility margins can be exhausted around noon if wind and solar are unable or unwilling to provide it, 2) upwards flexibility becomes more scarce during morning and evening peak demand events and 3) a greater portion of upwards flexibility is provided by energy-limited resources. Based on these findings, I then recommend that policy-makers examine how existing operational practices can be augmented to elicit upwards flexibility provision, and that duration specifications and sustained footroom procurement be considered for reserve products.</p>
+<p>Understanding the quantity of balancing flexibility available in a power system is inadequate if market participants are unable or unwilling to offer it into the wholesale spot market. As such, I explore whether market knowledge processes, which provide market participants with current and forecasted power system and market information, and participation rules in the Australian NEM are purpose-fit to enable the effective and efficient scheduling of energy storage resources – resources critical to balancing high renewables power systems through energy arbitrage. From an analysis of the centralised price forecasts generated by the NEM’s system and market operator, I find that errors in these forecasts are increasing in frequency and severity and, as such, arbitrage revenues can be reduced by 15-60+% should these forecasts be used to guide battery energy storage scheduling. I then investigate whether market participant (re)bidding is responsible for this phenomenon, and subsequently discuss changes to participant scheduling strategies and market design that could improve scheduling outcomes. I recommend that Australian policy-makers not only increase the frequency at which centralised knowledge processes are run, but also consider whether stricter market participation restrictions might incentivise participant bidding strategies that are less likely to induce sudden price forecast swings that can hamper effective scheduling.</p>
+<p>The key contributions of the work contained within this thesis include the development, improvement and maintenance of open-source software that facilitates accessing and analysing data from the Australian NEM, detailed empirical analysis of frequency control, reserve and scheduling arrangements in the NEM and other restructured jurisdictions, and pragmatic market design and governance recommendations that could assist the NEM and other jurisdictions in maintaining a balance of power as they progressively retire fossil fuel generation whilst simultaneously deploying massive amounts of variable renewable energy.<br />
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 <h1 class="unnumbered" id="works-arising-from-this-thesis">Works arising from this thesis</h1>
 <h2 class="unnumbered" id="peer-reviewed-journal-articles">Peer-reviewed journal articles</h2>
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@@ -280,7 +282,7 @@ <h2 class="unnumbered" id="open-source-software-development">Open source softwar
 <h1 class="unnumbered" id="acknowledgements">Acknowledgements</h1>
 <p>I wouldn’t describe myself as bold, but fortune has certainly favoured me.</p>
 <p>I am lucky to have stumbled into doing a PhD with Anna and Iain as my supervisors. Thank you for taking me on, and for your wisdom, guidance and encouragement over the years. I will forever be grateful to you both for helping me embrace complexity and showing me the value of an interdisciplinary approach.</p>
-<p>I am lucky to have met some amazing people within the Collaboration on Energy and Environmental Markets. Nick, thank you so much for our insightful chats, your incisive and constructive criticism of the work in this thesis, and of course, the whips and catches. I’ve learnt so much from your approach to software, problem-solving and life. To Sophie, thank you for our chats, the opportunity to work with you and for showing me the power of asking “why?”. To Simon, thanks for letting me always interrupt your days for our very enjoyable chats on campus. Rohan, thank you for letting me crash your honours project and giving me the opportunity to work with you. Declan, thanks for all our conversations about modelling, electricity markets and energy policy. Ash and Declan, thank you for signing up to write that submission with me. And to the broader group, thanks for sharing your kindness, wisdom and experience. I’ve enjoyed hearing about your work and sharing mine at all the discussion groups over the years.</p>
+<p>I am lucky to have met some amazing people within the Collaboration on Energy and Environmental Markets. Nick, thank you so much for our insightful chats, your incisive and constructive criticism of the work in this thesis, and of course, the whips and catches. I’ve learnt so much from your approach to software, problem-solving and life. To Sophie, thank you for our chats, the opportunity to work with you and for showing me the power of asking “why?”. To Simon, thanks for letting me always interrupt your days for our very enjoyable chats on campus. Rohan, thank you for letting me crash your honours project and giving me the opportunity to work with you. Declan, thanks for all our conversations about modelling, electricity markets and energy policy. Ash and Declan, thank you for signing up to write that submission with me. And to the broader group, thanks for your kindness and for sharing your wisdom and experience. I’ve enjoyed hearing about your work and sharing mine at all the discussion groups over the years.</p>
 <p>I am lucky to have had some amazing friends who have helped me along the way whilst also tolerating my sub-par banter. Christian, thanks for being generous with your time in proof-reading and editing parts of this thesis. To Vicky, thanks for your love and support during the early years. To my various housemates – Nicola, Jeff, Hayden (!), Kate and Sammi in particular – thanks for being there through my highs and lows. Owen, thanks for showing me you can mix work with pleasure. To my trivia team and frisbee group, thanks for the very fun distractions. And to my many climbing partners, thank you for keeping me safe and sane. To everyone I couldn’t name here, I am lucky to be able to call you a friend.</p>
 <p>I am lucky to have a mum and dad who have been very supportive and love me very much. Thank you for always being there for me and for reminding what is important in life.</p>
 <p>I am lucky to have received feedback and support for the work in this thesis from many individuals and organisations. Thank you to Andrew Corrigan and Max Zekulich for sharing their data and analysis on frequency response and FCAS markets. To the team at WattClarity and to the Australian Energy Market Operator, the Australian Energy Market Commission and the Energy Security Board, thank you for the opportunity to present and get feedback on parts of this thesis. To the Australian Government Research Training Program and the UNSW Digital Grid Futures Institute, thank you for your financial support and to the UNSW Sydney Research Technology Services, thanks for giving me access to Katana. And to the various reviewers of the work in this thesis, thank you for your thoughtful comments.</p>