Securing the future of the National Electricity Market (NEM) is key to the delivery of reliable, secure and affordable electricity to Australian households and businesses, according to Minister for Energy and Emissions Reduction Angus Taylor.
The Energy Security Board’s (ESB) Post-2025 Market Design Directions Paper (MDDP), released yesterday (Tuesday 5 December), marks a significant milestone in the market reform underway across the NEM.
The post-2025 strategy is the most critical energy reform governments have been tasked to deliver by National Cabinet.
The paper sets out the direction of market reforms the ESB will pursue through its post-2025 work.
Importantly, the Post-2025 MDDP includes an increased focus on addressing the risks to reliability, security and affordability of a sudden and unexpected exit of a thermal generator.
Mr Taylor said the post-2025 work was an important step towards developing a new fit-for-purpose market framework that would empower consumers and support the continued dependability of the interconnected system.
“The NEM is at a turning point, with expanding choices, latest technologies and large-scale replacement of thermal generation needed as older power stations leave the market,” he explained.
“Taking action now is critical and will minimise disruptions, and avoid unintended consequences.
“The record levels of intermittent generation along with major thermal generator closures demands a clear focus on reliability and investment.
“The NEM must adapt to address risks to reliability, security and affordability, particularly sudden, unexpected exits of thermal generators.
“We need long-term signals for private sector investment in reliable generation and storage, to replace existing generators with like-for-like capacity.
“A coordinated approach to market design is required to keep the lights on and costs down.
“The commitment of all energy ministers to the post-2025 process recognises the importance of working together.
”I look forward to continuing to work with my state and territory colleagues to progress the post 2025 market design that delivers for Australians.”
The NEM plays a vital role in the country’s energy system, efficiently delivering electricity to consumers across New South Wales, Victoria, Queensland, South Australia, Tasmania and the ACT.
As Australia recovers from the impacts of COVID-19, the Morrison government is focused on ensuring Australians have access to affordable and reliable energy.
The ESB will work with stakeholders to develop the detailed market design ahead of further consultation in March.
Final recommendations on post-2025 market design are expected to be delivered to energy ministers in mid-2021.