Two major pieces of work landed with a thud this week in the form of the market operator’s draft Integrated System Plan and the rule maker’s draft pricing review.

Policy

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The Australian Energy Market Operator (AEMO) listened and tweaked its draft Integrated System Plan. There is much less new transmission than in the 2024 version, and plummeting costs of batteries and solar panels have also trimmed the amount of wind and gas generation required. Some coal power also sticks around longer, thanks largely to the Queensland government.

But AEMO’s overall conclusion and direction are unchanged: “Renewable energy connected with transmission and distribution, firmed with storage and backed up by gas is the least cost way to supply electricity to homes and businesses through to 2050.”

Under Queensland’s Planning (Battery Storage Facilities) and Other Legislation Amendment Regulation 2025, large stand-alone BESS projects (50MW or more) must now undertake social impact assessment and agree with the local government on community benefits before lodging a development application.

Australia’s data centre developers are not procuring enough clean energy to offset the price impact of their increased energy demand on the National Electricity Market (NEM), nor are policymakers doing enough to make them green. If no additional offsetting renewable generation and storage is built, modelling based on the central case would result in wholesale prices rising by 26% in NSW and 23% in Victoria by 2035 compared to the baseline scenario, warns a Clean Energy Finance Corporation (CEFC) report with consultants Baringa.

Macquarie University economic lecturer Rohan Best said the federal government was subsidising unnecessarily large home batteries with “massive” uptake rates. At this pace, the budget allocation of $2.3 billion might run out in 2026, rather than 2030 as originally planned, and if extended could blow out to around $10 billion. (The Conversation)

Labor’s tax cuts, not another round of energy rebates, are the best way to provide cost-of-living relief, Treasurer Jim Chalmers told reporters after Cabinet made the “difficult” call ahead of next week's budget update. Initially funded for just one year, the bill relief distributed via energy retailers was extended as cost-of-living pressures remained acute. “There have been three rounds of electricity bill rebates, and there won't be a fourth,” he said, confirming the measure would end on December 31. (The Australian) (Sky News) (ABC) (Capital Brief)

Regulation

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The Default Market Offer could be retired and energy service providers forced to get rid of the loyalty tax under pricing reforms the Australian Energy Market Commission (AEMC) is hoping to deliver within a decade. A move towards higher fixed network charges, an idea supported by Energy Consumers Australia, is on the cards with the fixed charge expected to recover more of each network’s revenue requirement than it does today. Retailer peak body the Australian Energy Council said limiting the ability of electricity retailers to offer incentives to new customers to sign up to better deals would have major implications for a competitive market.

Energy Consumers Australia (ECA) said the beneficiary-pays approach in a rule change made by the Australian Energy Market Commission (AEMC) would help consumers assess the true costs of using gas when weighing whether to electrify. The decision amends the National Gas Rules (NGRs) and means gas network distributors will charge new customers the full upfront cost of new connections, rather than socialising the costs across existing gas customers. “Australian household and small business gas use is expected to decline 72% by 2043 and be largely non-existent by 2050,” ECA CEO Brendan French said.

The Australian Energy Regulator’s decision to grant Ausgrid a sandbox waiver for its Community Power Network trial undermines competition and sidelines the consumer protections that underpin the National Electricity Market (NEM), critics said. Ausgrid will own and operate 130MWh of battery assets in the Mascot-Botany area of Sydney and in the Charmhaven region of the NSW Central Coast during the five-year trial, as well as install up to 70MW of solar generation assets as a supplier of last resort.

Capital

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Singapore-listed energy player Sembcorp agreed terms to acquire Australia’s fourth-largest utility company, Alinta Energy, in a deal valued at $6.5 billion. The deal will see the Temasek-backed business acquire Alinta in whole, including its coal-fired Loy Yang B power plant in Victoria, retail business and renewables assets. (AFR)

WA-based Frontier Energy (ASX: FHE) went on a trading halt to complete a $10 million capital raising, and signalled a debt raising in 2026. Stage One of Frontier’s Waroona Renewable Energy Project, comprising a 120MW solar farm with 81.5MW battery storage, is “locked and loaded” with revenue certainty secured, all connections and approvals in place, and a rising power price and growing supply gap, CEO Adam Kiley told an investor webinar.

The AGL-backed (ASX: AGL) consortium behind the proposed 2.5GW Gippsland Skies offshore wind project surrendered its licence, further jeopardising Victoria’s coal-exit plans.

Squadron Energy secured $1 billion in financing for its massive Clarke Creek wind farm in Queensland. The deal, arranged with a group of 10 lenders and supported by Squadron’s existing banks, set a market benchmark for single-asset wind financings, the company said.

Projects

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Origin (ASX: ORG) approved the $80 million fourth stage of its large-scale battery at Eraring Power Station, adding 360MWh of storage to cover the evening peak.

Equis Australia and SEC switched on the $1.1 billion Melbourne Renewable Energy Hub, which is positioned where Victoria’s critical transmission routes join to support the Melbourne metropolitan load and is the only BESS in Victoria capable of supporting three Victorian Renewable Energy Zones.

Workforce

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The main barriers preventing people from entering energy-related training include costs, foregone wages and limited awareness of available programs, according to an IEA energy employment report.

Technology

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Energy Minister Chris Bowen officially launched the Vehicle-Grid Network (VGN) project, funded by the Australian Renewable Energy Agency (ARENA), the RACE for 2030 CRC, and industry partners. The project, aiming to solve technical, regulatory and market challenges to widespread V2G uptake, will be led by Climate-KIC Australia and the University of Technology Sydney’s Institute for Sustainable Futures (ISF).

Looking ahead to next week, the CSIRO will release the annual GenCost report, and the final report in the long running NEM review will be delivered.