R1 Investment Certainty

During discussions held in the CRI, industry raised concerns that the National Electricity Rules (NER) were unclear regarding what modelling and additional analysis could be requested of generators and developers during the ‘R1’ phase. R1 is the period between the project’s financial commitment (following the execution of the connection agreement) and the commencement of revenue (following registration and commissioning). The R1 Investment Certainty workstream was formed and led by the Clean Energy Council (CEC) to investigate and draft a rule change request to the Australian Energy Market Commission (AEMC).

On 17 May 2023, the CEC submitted the Enhancing investment certainty in the R1 Process rule change request to the AEMC. The request sought to drive investment certainty by clarifying the process and responsibilities for the assessment of a generator’s ability to meet its performance standards as a requirement of market registration – known as the ‘R1 process’.

The CEC collaborated extensively with developers and generators, investors, Network Service Providers (NSPs) and AEMO, as well as experts from KPMG, to understand the key challenges in the R1 process and to establish workable solutions to them.

Key elements included in the CEC’s request were to:

• provide generation applicants with more certainty on the process (including timeframes) for AEMO and NSPs to assess a generator’s detailed design and R1 modelling packages (R1 package) and for AEMO to approve the project’s registration.
• increase transparency by requiring justification from NSPs and AEMO where additional information or modelling requests were made.
• enable more efficient allocation of risks and costs between NSPs and generators to manage system security risks identified at the R1 stage.
• remove barriers to a NSP and AEMO agreeing to alterations to the generator performance standards in the Connection Agreement, by clarifying where such changes were likely to have no material impact on system security.
• introduce a new facilitated review process to manage intractable issues that emerge between generators, NSPs and AEMO
• clarify the process for conditional registrations.

After making substantial changes to its draft determination and draft rule to incorporate feedback from the CEC, AEMO and other stakeholders, the AEMC published its final rule on 27 June 2024. The final rule and determination can be found on the AEMC’s website:

The final rule:

• removes barriers to sensible revisions of a generator's performance standards.
• clarifies the obligations of all parties during the R1 process.
• requires AEMO to outline the process for assessing the capability of a generating system to comply with its agreed generator performance standards (capability assessment) in updated registration information resource and guidelines. AEMO will consult with stakeholders and update the guidelines in the SCP R1 assessment workstream. The guidelines will outline:
  • data and information to be provided to AEMO and the NSP when submitting the R1 package.
  • examples of the circumstances in which AEMO or the NSP may request additional data and information from a connection applicant, as well as examples of the types of data and information the connection applicant may provide in response.
  • how AEMO may assess, and the matters taken into account, when assessing the R1 package, and whether the connecting plant may have an adverse effect on power system security or the quality of supply for other network users.

• formalises the commencement and conclusion of the R1 process through timely notifications by AEMO.
• clarifies that AEMO can conditionally register generators and integrated resource providers. AEMO must first consult and produce guidance on when this may be appropriate through updating its registration information resource and guidelines.
• requires AEMO and NSPs to provide written reasons why additional data and information is requested during the R1 assessment. Additionally, the connection applicant may request further clarification (which AEMO or the NSP must provide within five business days of receiving that request).
• introduces a 60 business day timeframe, from the commencement of the capability assessment, for AEMO to either inform the applicant that the capability assessment is satisfactory (conditionally or unconditionally), or if not, provide an update on the next steps for the assessment.

The AEMC in its Final Determination notes that the registration information resource and guidelines should set out how AEMO assesses power system issues due to factors that may be external to the connection applicant’s plant.  The CEC and AEMO will work collaboratively through the CRI to explore ways for NSPs and AEMO to coordinate works which deliver lower cost solutions to system strength or other technical issues.

The rule change came into force on 11 July 2024. AEMO is required to update its registration information resource and guidelines by no later than 1 March 2025.