Looking ahead to 2025
In March 2019, the COAG Energy Council requested that the Energy Security Board (ESB) consider whether any changes were required to the core National Electricity Market (NEM) framework in order to facilitate the technological shift towards a lower emissions electricity system.
The reforms represent a generational shift in the operation of the NEM, which was originally designed in the 1990s to cater for traditional dispatchable energy sources (coal and gas). The uptake of small and large-scale renewable energy and the growth of demand-side technologies has necessitated a new, fit-for-purpose model which can recognise and respond to the changing energy landscape.
The ESB has set a 2025 timeframe to redesign the NEM so that it is fit for the following purposes:
- meeting consumer needs;
- managing variability and uncertainty;
- appreciating the need for capital replacement; and
- recognising demand flexibility and integrating Distributed Energy Resources (DER).
The ESB has adopted a phased implementation for development and delivery of the post-2025 market design, involving three key phases:
- Short-term (12-18 month) deliverables – relates to interim reforms to be implemented as soon as practicable, including:
- Interim Reliability Measures – new rules commenced on 21 August 2020.
- Interim Security Measures – first stage of improvements to be implanted ahead of the 2020/21 summer and the balance of measures by the end of June 2021.
- Renewable Energy Zones – consultation paper and draft Renewable Energy Planning Rules published on 11 August 2020.
- ISP Rule Changes – new rules commenced on 1 July 2020.
- DER – the ESB is expected to provide recommendations to the COAG Energy Council for approval in October 2020.
- Intermediate deliverables – relates to substantial reforms to be designed by December 2020 with implementation, in full or in part, before 2025:
- Essential System Services, Scheduling and Ahead Markets – consultation paper published in April 2020.
- Two-Sided Markets – consultation paper published in April 2020.
- Transmission Access Reform through the Coordination of Generation and Transmission Investment – AEMC continues to work with stakeholders to refine the access model and develop a set of draft rules.
- Longer term deliverables – relates to the development of actions for implementation after 2025, including:
- investment signals for reliability;
- aging thermal generator strategy; and
- initiatives relating to the development of DER markets.
Final recommendations on all aspects of the program delivery will be made no later than mid-2021, with the development of legislation and rules to follow.
- September 2019 – Post-2025 Issues Paper
- March 2020 – COAG Papers Ahead Markets and System Services Two-sided Markets
- September 2020 – Post-2025 Program Consultation Paper
To be completed:
- December 2020 / January 2021 – Market Design Options Paper to COAG Energy Council
- June 2021 – Market Design Recommendations
*Indicative timeline only.
- Post 2025 Market Design – Consultation Paper (7 September 2020)
- Post 2025 Market Design – Directions Paper (April 2020)
- Post 2025 Market Design – Issues Paper (2 September 2019)
- Post 2025 Market Design – Scope and Forward Work Plan
- Post 2025 Design for the National Electricity Market (NEM) (22 March 2019)