An independent panel has been established by the Federal Government to review how the National Electricity Market (NEM) will operate, with a goal to keep costs low for consumers as the integration of rooftop solar and utility-scale renewables increases.
The panel – led by Griffith University Associate Professor, Tim Nelson, with Paula Conboy, Ava Hancock and Philip Hirschhorn – will undertake widespread consultation and make its final recommendations to Energy and Climate Ministers in late 2025.
The panel will look at NEM wholesale market settings to ensure the market promotes investment in firmed renewable energy generation and storage capacity into the 2030s and beyond. The Federal Government said this is vital as electricity demand grows and ageing coal fired power stations exit the system.
The NEM is one of the world’s largest interconnected networks with around 40,000km of transmission lines and cables and supplying electricity to more than 23 million people.
It covers all states and territories apart from Western Australia and the Northern Territory and was originally designed to support a baseload power grid predominantly fuelled by coal generators.
The Federal Government said a review has become increasingly important to ensure the right settings are in place to meet increasing demand for electricity and to support a smooth transition to reliable renewables as ageing coal-fired power stations are retired from the system.
The Federal Government, with the support of NEM state and territory governments previously responded to the need for accelerated investment in firmed renewables by introducing the Capacity Investment Scheme (CIS), which aims to deliver almost half as much capacity again in clean, cheap, reliable renewables and storage, as is in the current NEM, by 2030.
State and territory governments and energy market bodies were consulted on the review’s terms of reference, which are available at the NEM wholesale market settings review page.
Federal Minister for Climate Change and Energy, Chris Bowen, said the reformed CIS has massively outperformed to date, which shows the investment appetite to deliver reliable renewables in Australia is very strong.
“The review will provide a comprehensive assessment of what the market will need next, once the current CIS tenders end in 2027, to ensure that investment pipeline remains strong.
“We’re doing the work now to ensure our grid will be stable and there will be enough clean, cheap, reliable renewable generation and storage to power Australia’s needs.”
Panel members
Mr Nelson is a public figure in energy markets with experience across academia, government, and industry. He is an Associate Professor of Economics at Griffith University and has held a range of senior roles with Iberdrola, a renewable energy developer, AGL, and the Australian Energy Markets Commission.
Ms Conboy has 25 years’ experience in energy market regulation and is the former Chair of the Australian Energy Regulator. Ms Conboy brings a wealth of experience including from the international context.
Ms Hancock brings expertise in electricity market policy and has strong experience in renewable energy project development. Ms Hancock played a pivotal role in design of the New South Wales Energy Roadmap.
Mr Hirschhorn was a Boston Consulting Group Senior Partner advising Australian energy businesses and government agencies and completed a BCG Henderson Institute Fellowship, researching electricity markets.
Industry response
The Australian Energy Council (AEC) welcomed the Federal Government’s announcement as a critical step towards the delivery of a reliable, affordable, and low emissions future energy system.
AEC Chief Executive, Louisa Kinnear, said the panel appointed by the Federal Government is highly credentialed and brings the appropriate mix of skills to consider lasting solutions.
“To achieve its objectives, it is crucial the panel focuses on market principles and a fit-for-purpose design. Amongst other considerations, it will need to consider how best to drive and support future investment in the right mix of technologies, including wind, supported by gas and long duration storage, while keeping electricity supplies secure and stable.”
Ms Kinnear said while the NEM has performed exceptionally well, changes need to be made to ensure it can drive timely investment in both renewables and long duration storage and firming assets.
“This review provides an opportunity to develop market signals that allow the energy industry and consumers to take the energy transition forward.
“The reshaping of our electricity system predominantly with renewable generation, backed by pumped hydro, battery storage, gas generation and consumer energy resources, like rooftop solar and home batteries, is challenging but comes with significant opportunities.
“This review is a chance to develop a pragmatic and enduring path forward. A successful outcome will allow the energy industry and consumers to decarbonise the energy system at least cost, while ensuring energy continues to be reliable and secure.”
Featured image: Mny-Jhee/shutterstock.com
