Major steps in support of the changing energy landscape
On 27 July 2021, the Energy Security Board (ESB) handed its final advice on the post-2025 redesign of the National Electricity Market (NEM) to the Energy National Cabinet Reform Committee and on 26 August 2021 this advice was publicly released. This is a significant step in a two-year work program undertaken by the ESB and Australia's primary energy market bodies – the Australian Energy Market Commission, the Australian Energy Market Operator and the Australian Energy Regulator.
The ESB's Post-2025 Market Design work has been directed at addressing the challenges faced by Australia's transitioning electricity system, and seeks to ensure that the electricity system is fit for purpose and supports the changing energy landscape. The advice covers the very wide range of issues and challenges facing our complex electricity system and its many stakeholders. While there are aspects of the advice that have attracted immediate attention and some controversy (such as the proposed capacity mechanism), any reader of the advice would be hard pressed not to appreciate the level of detail and thought that has clearly gone into this body of work.
We are considering the implications of the ESB's final advice, and opportunities in this space for our clients and the sector more broadly. We will be publishing further Insights in relation to:
- the jurisdictional strategic reserve (JSR) mechanism;
- the proposed capacity mechanism; and
- the congestion management model adapted for integration with renewable energy zones.
The final advice builds on the Options Paper released by the ESB in April 2021 (see our previous Insights on the Options Paper here) and is comprised of a package of reforms across four interrelated pathways and a timeline for their implementation (ie immediate, initial or long-term reforms).
The reform pathways
We analyse the four pathways and some of the key reforms below. Click on each of the buttons for more information.
National Cabinet is now considering the recommendations made by the ESB. A final package of reforms will be determined following a meeting of Energy Ministers in September, after which the final reforms will be provided to National Cabinet for consideration in October.