Defining success for the National Electricity Market


Hey Reader, in today's edition:

  • Big ask for National Electricity Market reform
  • Unlocking $4bn for the Wholesale Electricity Market
  • Boos in Ballarat

What does success look like?

The National Electricity Market (NEM) review panel has been engaging heavily in recent weeks as the September 17 deadline for submissions on its draft report draws near. There have been plenty of questions on how each element of the recommendations might work in practice.

The independent NEM Wholesale Market Settings Review, established in November 2024, is investigating how the market can be reformed to promote long-term investment in firmed, renewable energy and storage, while also addressing price volatility and delivering more predictable, stable bills for consumers. Final recommendations will be put to the nation’s energy ministers by the end of 2025.

Writing for The Energy, Baringa’s energy markets lead Peter Sherry takes a step back and explores how to define success for what is the latest in a long line of energy market reviews.

Expert view

"The market alone will not deliver the firming technologies that we need, and certainly not with price settings that appropriately protect consumers.

The ‘missing money’ — the gap between the revenues that assets such as long duration BESS, pumped hydro, and open-cycle gas turbines require, and the revenues they can earn in the market — means a financial ‘top-up’ is needed for these investments to proceed. In recent years, the solution has been government ownership, and the NEM review is rightly aiming to move away from that towards a more market-based solution.

The Electricity Services Entry Mechanism proposal is aimed at addressing this missing money gap, providing an additional revenue stream for these assets by contracting for the long-term provision of firming services.

If the NEM review can make this work, and the market can bring forward the firming services our future energy system needs without government stepping in to build assets, it will have been a success. But making it work will not be straightforward.”

Peter Sherry
Partner and Australia Lead, Energy Markets, Baringa

Unlocking $4 billion for the WEM

The latest rounds under the Federal Government's Capacity Investment Scheme (CIS) will unlock an estimated $4 billion of private investment in Western Australia’s Wholesale Electricity Market (WEM) as coal exits the system.

Proponents will have ten weeks to submit their bids under the new streamlined CIS process.

“CIS is already enhancing our energy transition, and adding a further 1.6 gigawatts of renewable generation will further strengthen our clean energy credentials and boost the capacity of our standalone energy grid,” WA Energy and Decarbonisation Minister Amber-Jade Sanderson said.

Matthew Brine, Head of the Office of the Capacity Investment Scheme (OCIS) at the Department of Climate Change, Energy, the Environment and Water (DCCEEW), said Tender 5 was the first tender to seek renewable energy generation bids in the WEM and has an indicative target of 1600MW.

Tender 6 seeks an indicative target of 2400 MWh of dispatchable capacity. This tender follows CIS Tender 2, where four successful projects aim to deliver 2,595 MWh of clean dispatchable energy across the WEM, which supplies electricity to the south-west of WA including Perth via the South West Interconnected System (SWIS), he said.

“I'm really proud of the OCIS team here in DCCEEW, and our tender delivery partners ASL, for all the great work on the new single-stage tender design.”
Matthew Brine
Head of OCIS at DCCEEW

The CIS is a cornerstone of the plan to achieve 82% renewables by 2030, delivering 40GW of new renewable capacity, supported by gas, storage and transmission.

Bidding for CIS Tender 5 – WEM Generation and CIS Tender 6 – WEM Dispatchable closes on November 7.

Catch Up

Capital

The biggest change in the world’s energy mix between now and 2050 will be a significant increase in solar and wind, coupled with a large reduction in coal, but oil is projected to remain the largest source of primary energy, according to Exxon Mobil’s (XOM.N) latest outlook. Gas demand is also projected to rise, largely to help meet rising demand for electricity, particularly in developing economies, and industrial heat.

Alcoa Corporation’s (NYSE: AA) social licence is fraying in its WA base as the Shire of Murray, home to the mining giant’s biggest Australian alumina refinery Pinjarra, voted unanimously not to support current activities or its planned expansion unless the company adopted 21 pages of detailed recommendations formulated by the Shire. (Boiling Cold) (Harvey-Waroona Reporter)


Projects

Environment Minister Murray Watt approved the long-delayed $3 billion wind farm on Robbins Island, with additional environmental conditions added to better protect the orange-bellied parrot, Tasmanian devil and Tasmanian wedge-tailed eagle. But environmentalists say that in allowing ACEN to go ahead, the federal government has signed a death warrant for the surrounding ecosystem. (The Australian) (Pulse Tasmania) (Guardian) (ABC) (AAP)

“The decision shows that large, complex projects can be delivered responsibly, balancing overall impacts and conserving biodiversity, with the need for clean energy to address climate change. It comes at a time when Australia faces a stalling energy transition and looming power shortages as coal exits the system. It also reflects the depth and rigour of ACEN’s work to address the assessment criteria and scrutiny applied through the approvals process.”
David Pollington
ACEN Australia Managing Director

The conditions require:

  • Comprehensive surveys for three years prior to construction, which will provide a significant amount of new information about the orange-bellied parrot and how it uses and flies over the island, to inform ongoing risk management during operations
  • The proponent will provide funding support for Tasmania's orange-bellied parrot conservation program, to continue rebuilding its population
  • A commitment to improve conservation outcomes for the orange-bellied parrot through new measures such as research and land management activities
  • Before the wind farm can begin generation, the conditions also require the proponent to develop and implement a bird and bat management plan to evaluate, mitigate and manage the risks of turbine collision for threatened birds
  • Management actions may include curtailment or shutdown of all or some turbines under an adaptive management framework.

An 81-turbine wind farm in southwest Victoria has been approved after more than a decade in the works. Planning Minister Sonya Kilkenny gave the nod on Saturday for the 400MW Mt Fyans wind farm project near Mortlake, west of Geelong. The state opposition previously dubbed it "the longest delayed project" in the state’s renewables planning system. (AAP)


Policy

Prime Minister Anthony Albanese and Victorian Premier Jacinta Allan faced boos and heckles at a forum hosted by the Herald-Sun in Ballarat, after the passage of Victoria’s land access legislation to facilitate new energy transmission projects. One woman in the crowd stood on a chair with a noose draped around her neck. (The Nightly) (ABC)

“While much of the attention has focused on provisions giving authorised officers powers to enter properties, the Bill also establishes the REZ Community Funds — a mechanism where developers contribute via access fees to support local communities."
Nathan Hart
Director of Advocacy & Community Engagement, Clean Energy Council

Coalition Leader Sussan Ley told the Ballarat audience: "We do need to have an energy policy that delivers affordable, reliable energy and plays Australia's role in reducing emissions, but that reducing emissions part and that energy policy, it can't come at any cost, and what we're seeing with this government is no regard for the cost."

Later, Environment Minister Murray Watt said the country needed renewable energy to bring down emissions and power bills and blamed energy companies for the lack of support.

"But of course in doing that we need to play very close attention to the environmental impacts of these proposals and the community impacts of these proposals and I'll be the first to say that not all energy companies have consulted communities the way that they should.”
Environment Minister Murray Watt told reporters

Julian Leeser, one of the few remaining Liberals to hold a metropolitan seat, said he supported the net zero emissions target, as the energy policy review grinds on.

“I've long been on the public record of being a supporter of the net zero target. Sussan Ley has set up a process to look at our energy policy … I want to see a target that reduces emissions, I want to see a policy that reduces prices because Australian businesses and families are struggling, and I want to see something that increases reliability so our economy can grow. We are not going to be in government for the next three years, and during that time we are already seeing emissions go up under Labor, prices go up, and reliability go down, and that needs to be the focus of our discussions on these issues.”
Liberal MP Julian Leeser told ABC’s Insiders

Regulation

The Treasury opened consultation on national licensing for electrical occupations, calling for feedback on barriers or challenges electricians face when working outside of their home state, kinds of electrical work to include in the scheme, and design options for the scheme.

“As we train the electrical professionals needed to transition our energy systems to net zero, we need them to be able to go where their skills are most needed with a license that is nationally recognised and understood. The national regime must put safety and quality at the centre of its design, reflecting best practice from across the country – not composed of existing lowest common denominators in sub-national jurisdictions.”
Michael Wright
ETU National Secretary

The Australian Energy Regulator released guidance for electricity market participants on compliance with critical Projected Assessment of System Adequacy (PASA) obligations under the National Electricity Rules, with participants urged to regularly review their systems and processes to ensure they remain compliant. PASA obligations fall within a Compliance and Enforcement Priority to support power system security and an efficient wholesale electricity market by focusing on compliance with network outage obligations, generator performance standards and availability obligations.


Technology

The first phase of the State Power Investment Corporation Sichuan Panzhihua 100MW/500MWh Vanadium Flow Battery Energy Storage Power Station was successfully connected to the grid following completion of technical commissioning. Sichuan’s first grid-connected vanadium flow energy storage project is expected to raise renewable energy utilisation in the region by 6.64 percentage points annually, equivalent to an additional 21.25 million kWh of green power consumption and a reduction of 1.353 million tonnes of carbon emissions each year.


Climate

As US President Donald Trump moves to dramatically increase LNG exports, residents in Pennsylvania towns along the Delaware River are pushing back against a new $7 billion terminal that will export the state’s plentiful fracked gas. (Inside Climate News)


People

John Tucker will leave his role as CEO of TAFE Queensland, effective December, after 18 years with the organisation.

Francesca Marlow, HR Projects Officer at Sodexo, won the Australian Resources and Energy Employer Association (AREEA) Future Leader Award for creating the SoBelong program, breaking down barriers to fly-in fly-out careers for women, Indigenous Australians, and the long-term unemployed.


Research

The ANU’s Social Research Centre’s latest Life in Australia™ research shows views on energy split sharply along party lines. Two thirds of Australians (68%) think renewables are “somewhat or very likely” to help the nation achieve zero by 2050, while just under half (45%) think nuclear power is “somewhat or very likely” to be of use for achieving the decarbonisation target.


Random

Can Newcastle – a city built on coal and steel – become ‘Australia’s Berlin’, with an artistic renaissance with a gritty authenticity all its own? (The Australian)

What's On

September 1-3
Farming Forever National Summit

Farmers for Climate Action CEO Natalie Collard, Rewiring Aeteroa CEO Mike Casey, NSW EnergyCo Chair Paul Binsted, ANU Director of the Institute for Climate, Energy & Disaster Solutions Professor Mark Howden and NAB Chief Climate Officer Jacqui Fox will speak at this Farmers for Climate Action event in Canberra.


September 2
Bias in action

ANU Institute for Infrastructure in Society Director Sara Bice, CEO of The Energy Charter Sabiene Heindl, Director of Partnerships and Engagement at Energy Estate Rosie King, and Head of Communications and Stakeholder Engagement at Ark Energy Melissa Pisani will speak at this renewable energy engagement webinar.


September 2-4
14th World Chambers Congress

OECD Secretary-General Mathias Cormann, CEFC Chair Steven Skala and Yurringa Energy CEO Arron Wood are among the speakers at this Melbourne event.


September 3
The case for an Australian clean commodities trading initiative

UNSW Professor of International Political Economy Elizabeth Thurbon and Australian country head of GAW Capital Oliver Yates will speak at this Curtin Institute for Energy Transition webinar.


September 3-4
NT Resources Week

SunCable CEO Ryan Willemsen-Bell, Northern Australia Infrastructure Facility Chair Tracey Hayes, Arafura Rare Earths CEO Darryl Cuzzubbo, Director of the Gas & Energy Transition Research Centre at UQ Professor David Close, and CSIRO Hydrogen Industry Mission Lead Dr Patrick G. Hartley will speak at this Darwin event, which includes a Clean Energy and Decarbonisation stream.


September 11-12
24th Energy in WA Conference

WA Program Director for The Superpower Institute Jessica Shaw will lead a panel on the nuts and bolts of how flexible, integrated solutions are being delivered, featuring Executive GM Commercial & Growth at AGIG Rachael Smith, APA’s GM Power Development Gary Bryant, Enscope President Phil Ireland, Accure’s Australia Head Alan Coller and AEMO’s System Operations expert Paul Elliott at this event in Perth.


September 16
The Price of Power: The Future of Australia's Energy Sector

Bluescope Chief Executive, Climate Change and Sustainability Deborah Caudle, Alinta Energy CEO Jeff Dimery, AGL CEO Damien Nicks and Australian Energy Council CEO Louisa Kinnear will speak at this American Chamber of Commerce event in Melbourne, with R. Blair Thomas, CEO of US energy investment firm EIG speaking via Zoom.


September 23
AEMO's Annual Results

Australian Energy Market Operator CEO Daniel Westerman and Executive General Manager for Finance and Governance Vanessa Hannan will outline progress against strategic priorities and initiatives, financial results for FY25 and priorities for FY26.


September 24
Updated net zero pathways for Australia

The Net Zero Australia Project team from the University of Melbourne, the University of Queensland and Princeton University will present their latest report on the roles of renewables, energy storage and firming including nuclear, carbon capture and storage and other complementary technologies at this hybrid event.

The Energy

The Energy is dedicated to covering the business of energy and in particular the people, capital, projects and emerging technology behind the energy transition.

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