The changing Generator Performance Standards landscape in EPC Contracts

Before I head down the path that winds its way through this post, I acknowledge that this topic is intensely complicated and differs from project to project.  I in no way claim to be a grid connection specialist.  This post only aims to set down some of my observations.  There are a multitude of people more qualified to discuss this, and in more depth.  If you’re one of those people, send me your thoughts.  We are all here to learn.  With my consultant’s disclaimer suitably covered, let’s kick off.

There are two aspects of grid connection works that I typically see in the projects I work on.  The first has to do with the negotiation and approval of the Generator Technical Performance Standards (GTPS) and the other has to do with connection works required to physically connect the facility to the grid.  This post deals with the first item, the GTPS.  I will attempt to tackle the second topic separately, as this is also fraught with interesting complexities.

Generator Technical Performance Standards.

This is a good paper by Dr Julian Eggleston of the Australian Energy Market Commission (AEMC) explaining the GTPS context, why they exist in the Australian electricity market, and how prospective generators go about complying with the requirements.  I’m not even going to pretend that I’m the right person to explain the process.

But in summary, there are three different access standards that are defined by the AEMC.  The paper referenced above provides a good overview of these:

A.      The automatic access standard

The automatic access standard reflects the level of performance required of a connection such that it does not adversely affect power system security or the quality of supply to network users, regardless of the size, technology and location of the connection point.

This means the automatic access standard should be set at a level that is a ‘safe harbour’ for connection applicants, and more importantly, for the power system and other network users. The automatic access standard is the level of performance that would be appropriate in any location of the power system, including under the poorest network conditions (relevant to that technical requirement) that are foreseeable across the power system.

B.       Minimum access standard

The minimum access standard reflects the lowest level of performance required of a connection such that it does not adversely affect power system security or the quality of supply to network users, taking into consideration the size, technology and location of the connection.

In practice, this means considering the lowest level of performance that may be acceptable for a connection to do no harm in the best network conditions (relevant to that technical requirement) that are currently seen across the power system. This is the key distinguishing factor between the automatic and minimum access standards.

As the access standards should reflect local power system conditions, it may be appropriate to set a minimum access standard for some technical requirements at no capability. However, for other requirements such as fault ride through capability, the access standards should set the minimum level of performance that is acceptable when connecting to the power system.

C.       Negotiated access standard

A negotiated access standard represents the point agreed by all parties to the negotiating process within the range provided by the automatic and the minimum access standard. It is the process that maintains system security and quality of supply at an efficient cost.

In practice, the projects we’ve seen always have some level of negotiation.  The automatic access standard would be overly expensive to implement and the minimum access standard is likely to not be adequate for the conditions specific to the proposed development. 

Projects that I was working on in 2017/18 placed the responsibility for grid connection modelling on the EPC Contractor.  They had to comply with the GTPS set out in the Connection Agreement, but then also had to do all works required to demonstrate that the facility could meet those standards.  They had to do the modelling, complete all the technical documentation and reporting and they were directly involved with the NSP in closing out any technical issues that were identified.  The Principal had ultimate registration responsibility, but the Contractor had to do most of the work to get the Principal to the finish line and bore the brunt of any changes in the interpretation of rules. Contractors, often new to the Australian market, were then responsible for meeting these standards that may be subject to change, with inverters that had not been tested in the market (and manufacturer models that were sometimes shaky at best.)

The upshot of all of this is that a number of Contractors struggled to demonstrate compliance.  And projects were delayed with an enormous financial impact on these Contractors.   In some cases these delays and associated damages were severe.  So severe that some Contractors have decided to pull out of the Australian renewables market altogether (e.g. Downer,  Biosar) and others have collapsed entirely (RCR Tomlinson.)

In 2018 I started to see some changes filter through in the EPC Contracts.  An example of this is the Contractor being able to rely on the GPS set out in the Connection Agreement.  Any changes required by the Market Operator deemed to be a change of interpretation of the Electricity Market Rules would be considered to be a change of law and the Contractor would be entitled to some sort of relief.  They were still responsible for the GPS modelling, but you could start to see some push back from the Contractors.

I went on maternity leave at the end of 2018 and came back to quite a different environment.  In the AEMC’s Final Determination on GTPS rule changes, effective from October 2018, they state the following:

AEMO considered the current arrangements for the negotiation of access standards are not adequate to support the ongoing security and efficient operation of the power system. It considered connection applicants often submit levels of performance at the level of the minimum access standard, which is not appropriate in many cases.

to address this, the final rule includes:

  • a requirement that when proposing a negotiated access standard a connection applicant must propose a level of performance that is as close as practicable to the automatic access standard, having regard to the need to protect plant from damage, power system conditions at the proposed location of the connection, and the commercial and technical feasibility of complying with the automatic access standard, and
  • where a negotiated access standard is proposed, a requirement for connection applicants to provide to the network service provider and AEMO reasons and evidence as to why the proposed negotiated access standard is appropriate.

My understanding of this determination is that a lot of the heavy lifting has to be done much earlier in the registration process than it used to.  We’re now seeing the modelling work taking place upfront, before the EPC Contract has even been signed. 

The Contractors are now responsible for meeting those standards, but they haven’t been lumped with the negotiations too.  They aren’t off the hook though. They still have a load of responsibilities.  They have to demonstrate that the facility designed and constructed complies with the GTPS.  They have to meet the requirements set out in the Connection Agreement, carry out any tests required by the NSP and have to complete R2 testing, submit the results to AEMO, and receive confirmation from AEMO that the results have been accepted.