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The Energy

Nelson review contracts at the ready

Published 3 months ago • 5 min read

Hey Reader, in today's edition:

  • NEM review contracts plan
  • Home battery program rejigged
  • New owner commits to Loy Yang B

Getting ahead of the NEM review action plan

The final report of the Tim Nelson-led review of wholesale market settings in the NEM is expected to be handed to federal and state energy ministers this week. Ministers will then decide whether to accept its recommendations and — if they do — will have two years to implement the new system.

In the meantime, the review panel has been busy formulating a new set of contracts that could undergo live trials in scheduled tenders for the federal Capacity Investment Scheme and in NSW Long Term Energy Supply Agreements in the last quarter of 2026.

Home battery program supersized

Almost $5 billion has been added to the Cheaper Home Batteries program, which is expected to see around 40GWh of capacity installed by 2030, doubling the election estimate of 1 million batteries and increasing the expected capacity by almost four times. With the initial allocation of $2.3 billion set to be used up in the first year, the settings will also be tweaked to stop supersized systems from exhausting the extra funding too soon.

Under this tiered system, Energy Minister Chris Bowen said support will be staggered in line with battery size, with support moderating per kWh for medium and larger batteries. The first 50kWh of a system remains eligible for support for battery systems sized up to 100kWh.

“It's crucial that everyone can share in the benefits from the clean energy transition, including renters, those living in apartments and low-income households. We call on the government to make the policy changes and investments necessary to make this a reality."
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Renew Australia for All spokesperson Sawsan Alfayadh
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“Batteries are a game-changer for household energy independence. But this must be just the start - every family, no matter their postcode or income, deserves access to clean, reliable energy.”
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Parents for Climate CEO Nic Seton

Solar Citizens said the program is now the right-size and demonstrates what is possible when governments back consumer-led energy solutions, with rooftop solar and batteries now playing a critical role in lowering energy prices across the grid. But equity and access must remain a priority, the advocacy group said, calling for a federal policy to enable solar for renters.

More than 160,000 households and small businesses have used the program to cut their power bills and take control of their energy use since July 1. The 3.5GWh of battery storage delivered has increased home battery capacity in Australia to almost twice the level before the program, Bowen said, with half installing solar panels for the first time or upgrading existing systems.

Expert view

“Adjusting how rebates are phased and tiered by battery size means the program is better calibrated to deliver the right battery, for the right home, at the right cost, while ensuring long-term program viability. That’s a sensible evolution, not a retreat. By lowering the upfront cost of batteries, the program accelerates the rollout of storage that reduces peak demand, eases pressure on the grid and defers expensive network upgrades.

We’re aggregating thousands of household batteries into what functions like a virtual, utility-scale battery, coordinated through a nationwide Virtual Power Plant. No single battery delivers this alone, but aggregated at scale, and tailored to the market settings of both the WEM and the NEM, the system value becomes material. When assessed on $/kWh installed, $/kW of flexible capacity, and speed to deployment, the return on investment to the system is stronger than many traditional alternatives, with the added benefit of lower household bills."

Robbie Campbell
CEO, Starling Energy Group

Catch Up

Capital

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Australia's largest aluminium smelter, Rio Tinto’s (ASX: RIO) Tomago smelter near Newcastle, will get discounted renewable energy to ensure it keeps running beyond 2028 but the cost to taxpayers is unclear. Tomago Aluminium CEO Jérôme Dozol had said the price of both renewable and coal-fired power into the future would render the smelter “unviable”. Industry Minister Tim Ayres said a long-term power purchase agreement (PPA) was being finalised and would not confirm what projects might be fast-tracked to achieve the deal. "Suffice to say there are costs and benefits that accrue to NSW and the Commonwealth and Tomago,” he said. (AAP) (ABC) (9News)

Alinta Energy’s new Singapore government-backed owner says it is committed to keep Loy Yang B running after agreeing to a $6.5 billion purchase. Alex Tan, Renewables CEO at Sembcorp said the coal-fired power plant in Victoria was a “very important asset” that would keep electricity affordable and secure amid a transition to cleaner energy. (AFR)

Policy

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Strong uptake of the popular Electric Car Discount will also be reflected in the Mid‑Year Economic and Fiscal Outlook (MYEFO) due out on Wednesday, with the measure costing $1.35 billion in 2025-26 — or 15 times more than initially forecast. Treasurer Jim Chalmers released terms for a review of a too popular tax exemption for electric and hybrid cars that was designed to kickstart take‑up and help reduce transport emissions. (AFR) (Drive)

Think tank Climate Energy Finance said the $12 billion annual subsidy to expensive, high-emissions diesel should be reviewed first, given it undermines both Australian energy security and our decarbonisation objectives. “Maintaining our addiction to imported fossil fuels via subsidies is a massive own-goal, taking >$50 billion annually of energy expenditure offshore rather than building domestic energy infrastructure capacities and workforce skills,” Director Tim Buckley said.

Technology

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Battery giants CATL and Gotion are getting into shipbuilding to retain dominance and bolster China’s efforts to build new-energy vessels amid a decarbonisation drive. (SCMP)

Climate

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Lauri Myllyvirta, Senior Fellow at the Asia Society Policy Institute, tackles five key questions for climate and energy that China’s policymakers need to answer in five-year plan documents, with 250-350GW of new wind and solar needed each year to meet China’s 2030 commitments, far above the 200GW being targeted. (Carbon Brief)

People

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Anna Collyer has been reappointed as chair of the Australian Energy Market Commission for a further five-year term.

Research

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The once-rigid link between economic growth and carbon emissions is decoupling, according to a study by the Energy and Climate Intelligence Unit (ECIU) that was released to coincide with the 10th anniversary of the Paris climate agreement. (Guardian)

What's On

December 15​
AEMC Public Forum: The pricing review

The Australian Energy Market Commission will host an online forum on its draft recommendations for the pricing review.

December 17​
AER Public Forum: AusNet Transmission Revenue Proposal 2027-32

The Australian Energy Regulator will host an online public forum for stakeholders to ask questions about AusNet's 2027-32 transmission revenue proposal.

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