Efficient Provision of Inertia- Draft Determination

AGL expresses strong concern regarding the AEMC’s decision not to progress the Australian Energy Council’s (AEC) proposed rule change to establish a spot market mechanism for inertia.

AGL maintains that a dedicated market for inertia would deliver clear and transparent price signals, enabling more efficient investment in technologies critical to system stability, such as synchronous condensers and grid-forming plant.

While the AEMC acknowledges the potential benefits of operational procurement—including improved efficiency, enhanced price discovery, and broader market participation—it has not adequately demonstrated how its decision aligns with the National Electricity Objective (NEO).

AGL believes that inertia must be explicitly valued and procured to support the secure and efficient operation of the National Electricity Market (NEM), particularly as thermal generation retires and renewable penetration increases.

The current reliance on network-led solutions and Transmission Network Service Providers (TNSPs) lacks transparency and may not deliver timely or cost-effective outcomes. AGL advocates for a coordinated, market-based framework that recognises all sources of inertia and incentivises proactive investment. Without such a mechanism, the NEM risks critical shortfalls in system strength, undermining reliability and the long-term interests of consumers.

Read the full submission (PDF).