Glossary of what’s what: to keep the lights on in Australia


This is simplified so that the general public hopefully have a better understanding of our industry. The idea is to add to this; When all the components are compiled; I will try to give a summary of how the Australian electricity market operates in plain English.



Baseload power refers to generation resources that generally run continuously throughout the year and operate at stable output levels. The continuous operation of baseload resources makes economic sense because they have low running costs relative to other sources of power. The value of baseload plants is mostly economic, and not related to their ability to follow the constantly varying system demand.

Baseload plants include coal-fired and gas-fired combined-cycle power plants. However, Australia’s international commitment to reduce carbon emissions is curtailing the economic viability of traditional baseload sources.

Chanel Island Power Station NT



Storage refers to energy captured for later use, typically in a battery. Electricity has been expensive to store in the past, but the cost of storage is expected to continue to fall with the improvement of battery technologies. For example, lithium-ion batteries were developed for mobile communications and laptops but now are being upscaled for electric vehicles and utility-scale energy storage.

Battery Storage Alice Springs NT





Demand refers to the amount of electricity required to meet consumption levels at any given moment. Power refers to the rate of energy consumption in megawatts (millions of Watts, or MW), whereas energy in megawatt-hours (MWh) refers to the total consumption over a period, such as a day, month or year.

Peak demand is the highest rate of energy consumption required in a particular season, such as heating in winter or cooling in summer. It is a vital measure because it determines how much generation equipment is needed to cover for unexpected outages and maintain reliable supply.


Dispatchable generation refers to a type of generation based on fossil fuels or hydropower that can be controlled to balance electricity supply and demand. More flexible power plants based on natural gas firing (such as open-cycle gas turbines or hydropower plants) can operate at partial loading and respond to short-term changes in supply and demand.

Flexibility is the key here. Storage can provide flexibility as well, either from batteries or pumped-hydro storage. The need for such resources is becoming more urgent due to retirement of the older baseload plants and the growing amount of less emissions-intensive energy sources.



Synchronous generators in power stations spin at around 50 cycles per second. This speed is referred to as “frequency” (denoted Hertz, symbol Hz). Controlling this constant frequency is essential for maintaining voltage and thus reliability.

If there is loss of generation somewhere, extra power is drawn through the electricity network from other plants. This causes these generators’ rotors to slow down and the system frequency to fall. A key parameter is the so-called “maximum rate of change of frequency”. The faster the frequency changes, the less time is available to take corrective action.


Inertia refers to the ability of a system to maintain a steady frequency after a significant imbalance between generation and load. The higher the inertia, the slower the rate of change of frequency after a disturbance.

One critical concern is that inertia must almost always be sufficient to enable stable power. Given many coal-fired power plants are being retired, the amount of inertia is falling markedly.

Eventually, power systems will need to provide inertia explicitly by adding synchronous rotors (operating independently of power generation) or by providing other power system controls that are able to respond very quickly to deviations in power system frequency. These can be based on a combination
of storage and advanced power electronics already available today.



In view of the long distances in the National Energy Market (4000km from end to end, the longest synchronous power system in the world), there are significant constraints in transmission capacity between the state-based regions. These constraints are given special treatment called “interconnectors”.

The marginal power losses across these interconnectors are calculated every five minutes to support efficient dispatch of resources and to ensure that the spot prices in each region are efficient and consistent with prevailing supply and demand. These interconnectors have limited capacity (due to overheating and other factors), however, and AEMO carefully manages their use to ensure balancing and inertia can be provided across regions.


Ancillary services refer to a variety of methods the market requires for consistent frequency and voltage control. They maintain the quality of supply and support the stability of the power system against disturbances. This frequency control is required during normal operation to maintain the continuous balance of energy supply and demand. For this purpose, some generation capacity is held in reserve in order to vary its output up and down to adjust the total system generation level.

This difference between the maximum power output and the lower operating level is called “spinning reserve”. Spinning reserve is also required for output reduction to cover sudden disconnection of load or sudden increase in solar or wind power.




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