The Coordinator of Energy (Coordinator) must review several Electricity System and Market (ESM) Rules provisions related to energy and availability limited resources in accordance with section 4.13B of the ESM Rules. Under clause 4.13B.2 of the ESM Rules, the first review must be completed by 1 October 2026.
Section 4.13B of the ESM Rules outlines the requirements for this review. These requirements were originally introduced to the ESM Rules on 1 November 2021. On 15 January 2025, additional requirements for this review were introduced to implement the outcomes of the Reserve Capacity Mechanism (RCM) Review.
The Coordinator considers that it is appropriate to undertake a review of the provisions that have been in operation for five years at the completion of the review aligning with the intent of the relevant ESM Rules. Consequently, the Coordinator will only review items implemented before or for the 2021 Reserve Capacity Cycle.
The significant growth of Electric Storge Resource (ESR) capacity may require appropriate solutions to mitigate Power System Security and Reliability (PSSR) issues, and this has also been included in the scope of this review. This was also identified by AEMO in its Engineering Roadmap FY2026 Priority Actions.
The scope of this Capability Class 2 Technologies (CC2T) Review includes:
- Whether market design changes are required to maintain PSSR with the growing share of ESR in the SWIS;
- Whether the methodology for rating the capacity of ESR for the purposes of setting Certified Reserve Capacity remains consistent with the State Electricity Objective (SEO);
- Whether the DSP Obligation Duration remains consistent with the SEO; and
- Whether the ESR obligation intervals (ESROI), including the effectiveness of the method used by AEMO to determine the ESROI, is consistent with the SEO.
This Review is being conducted in consultation with the Market Advisory Committee and the Capability Class 2 Technologies Review Working Group (CC2TRWG).
Capability Class 2 Technologies Review Consultation Paper
On 4 August 2026, the Department of Energy and Economic Diversification published a Consultation Paper that presents the analysis undertaken in the Capability Class 2 Technologies Review and proposals to improve the operation of Capability Class 2 Technologies in the Reserve Capacity Mechanism (RCM) and the Wholesale Electricity Market (WEM).
The Consultation Paper outlines the rationale for:
- retaining the Linearly Derating Method for Electric Storage Resources (ESRs) within the RCM;
- retaining the current approach for determining Electric Storage Resource Obligation Intervals (ESROIs); and
- not introducing subclasses for tie-breaking purposes within Capability Class 2 for Network Access Quantity Prioritisation.
The Consultation Paper presents seven main proposals to amend the Electricity System and Market (ESM) Rules to:
- Measure the total energy delivered for assessing ESR performance in a Reserve Capacity Test.
- Change the Demand Side Programme (DSP) availability obligation to 8:00am to 12:00pm and 2:00pm to 10:00pm on Business days. An alternative morning window of 4:00am to 8:00am is also suggested instead of the 8:00am to 12:00pm option.
- Allow a DSP Participant to choose only the 2:00pm to 10:00pm window and receive the Reserve Capacity Price derated by 8/12.
- Allow a DSP Participant, with respect to a single Associated Load of ≥ 5MW, to have its Capacity Credits reduced and a corresponding portion of its Reserve Capacity Security returned, provided certain conditions are met.
- Empower AEMO to include a Lack of Reserve – State of Charge (LOR-SOC) condition in the Low Reserve Condition Framework. This will allow AEMO to set a minimum state of charge level for the ESR fleet when AEMO determines that ESR discharge will be required during the ESROIs to prevent the risk of unserved energy.
- Ensure ESR operators can comply with the LOR-SOC obligation and their other obligations through either constraint equations or market submission changes.
- Introduce an addition to the current refund mechanism for ESRs when an LOR-SOC is in effect.
Stakeholder feedback is specifically requested on a preferred option for proposals 2 and 6.
The consultation period closes at 5:00pm (AWST) on 1 September 2026. Late submissions may not be considered.
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