What we do
AEMO’s primary role is to perform the functions and exercise the powers given to us under national and Western Australian electricity and gas laws.
These are outlined in documents including AEMO’s constitution (article 2), the National Electricity Law (part 5), the National Gas Law (chapter 2, part 6), the National Energy Retail Law, the Australian Energy Market Operator (Functions) Regulations 2015 (WA) (section 4) and the Wholesale Energy Market Rules (WA) (clause 2).
These functions seek to promote the efficient investment in, and efficient operation and use of, gas and electricity for the long-term interests of Australian consumers in relation to price, quality, safety, reliability and security. This translates to the following areas of responsibility:
- Maintain secure electricity and gas systems.
- Manage electricity and gas markets.
- Lead the design of Australia’s future energy system.
Maintain secure electricity and gas systems
We oversee the operations and security of the National Energy Market (NEM) power system in eastern and south-eastern Australia and the Wholesale Energy Market (WEM) in Western Australia, as well as the Declared Transmission System (DTS) in the Victorian Declared Wholesale Gas Market (DWGM). We also manage the gas Short Term Trading Market (STTM), the Gas Supply Hubs (GSH) and Pipeline Capacity Trading (PCT), as well as retail markets in electricity and gas. These roles are at the heart of AEMO’s responsibilities, ensuring that residential, business and industrial customers can access secure, reliable energy.
To perform this role, we monitor system performance and security via 24/7 control rooms. This ensures that the capacity to produce and transport energy can meet demand. In the NEM and WEM, we also manage the essential services that support a secure electricity system, such as regulation balancing, frequency control, inertia and system strength, voltage management and system restart capabilities.
Forecasting and modelling of potential (or developing) changes is critical to our work. We produce short-term, long-term and operational predictions of demand and supply, and provide information to market participants about forecast risks to supply. We also assess, and plan for, the impact that operational changes will have on the system, such as planned outages, the connection of new generators and gas supply levels.
If an energy-related event or emergency were to occur, AEMO is responsible for restoring our energy systems to a secure operating state as soon and safely as possible. Mechanisms to address this in electricity systems include load shedding (a last resort measure), the purchase of ancillary services, enacting the Reliability and Emergency Reserve Trader (RERT) process and, in WA, drawing on the reserve capacity mechanism. In the DTS, options can include instructing participants to withdraw or inject gas, or enacting curtailment.
Finally, we are responsible for the coordination and management of emergency arrangements across the NEM, WEM and East Coast Gas System (including the gas markets). This includes collaborating with governments, emergency services and the energy industry participants during major disruptions of energy supply.
Manage electricity and gas markets
We operate the wholesale markets for the NEM, the WEM, the DWGM, the STTM, the GSH and PCT, and electricity and gas retail markets.
The wholesale electricity markets and Victoria’s DWGM allow market participants to buy and sell energy, with supply and demand being matched in real-time through a coordinated dispatch process, and the cheapest energy providers being put into operation first. This approach is designed to meet energy consumption needs in the most cost-efficient way.
Although most wholesale gas outside of Victoria is sold outside of facilitated markets under bilateral agreements between producers, retailers and major users, the STTM, GSH and PCT support secondary trades and/or encourage pipelines and gas to be used efficiently.
The retail electricity and gas markets underpin the wholesale markets by facilitating retail competition and allowing all customers to purchase energy from the supplier of their choice. While we are not the retail price regulator, we are responsible for the systems and infrastructure – such as metering – that support customer transfer and retail competition.
In our role as the market operator, we register market participants, oversee trading and, for electricity markets, the DWGM and STTM, manage dispatch and scheduling. We oversee the financial functions of the markets, settling all transactions and trades, and providing prudential monitoring to manage financial risk.
We’re also responsible for the systems that facilitate market activities and provide participants with clear, accurate and timely data relating to the market. These include the Gas Bulletin Board (GBB) and the WA Gas Bulletin Board (WA GBB), as well as a number of market IT systems and interfaces.
In managing the markets, we gain unparalleled insights into factors affecting the energy sector. As a result, we also provide longer-term analysis and advice around market performance, issues and trends. This allows participants and other stakeholders to make effective decisions and helps to improve the efficiency and transparency of our energy markets.
Lead the design of Australia’s future energy system
With Australia’s energy landscape experiencing significant disruptive, transformational changes, designing an energy system that addresses and harnesses these changes has become a key focus for our organisation.
AEMO provides the detailed, independent planning, forecasting and modelling information and advice that drives effective and strategic decision-making, regulatory changes and investment.
In our role as market and systems operator, we also have the ability – often in partnership – to trial recommended changes to our systems and markets, such as establishing Virtual Power Plant demonstrations or using Tesla’s battery at Hornsdale to provide Frequency Control Ancillary Services (FCAS).
Our formal relationships with governments, energy market bodies and participants allow us to facilitate effective collaboration between various parties, helping the organisations to work together to identify, agree on and make the necessary changes to ensure our markets and energy systems are fit for purpose.
And, finally, as the independent market and systems operator, we are able to develop the standards and frameworks, and implement the necessary changes across markets and systems that will support a stronger, more effective energy system.