Key to Reforming National Electricity Market: Build On Demand Response

Australia’s electricity sector is being revolutionised by the rise of renewable energy and storage, but new analysis from the Australia Institute’s Climate & Energy Program shows the current energy market framework is holding these technologies back.

In 2018 the Federal and State/Territory Governments tasked the Energy Security Board with designing a new National Electricity Market (NEM) for 2025 onwards. Known as the P2025 redesign, this would enable the NEM to remain reliable and efficient as outdated energy technologies are succeeded by new renewable energy, batteries and transmission infrastructure. Our submission to the ESB’s September 2020 Consultation Paper argues that the key outcome from the P2025 redesign should be more competition from clean energy and storage.

Key Findings:

  • There is an urgent to design a new National Electricity Market as relying on outdated coal is increasingly risky.
  • Australia Institute research shows gas and coal generators have suffered from almost 300 unplanned outages in less than 3 years (December 2017 to present).
  • Australia’s energy system and market needs to be designed to enable coal-fired power to be retired and renewables, storage and demand response to deliver energy and essential security services that keep the grid reliable

Key recommendations from the Australia Institute submission include:

  • Build on the AEMC’s Wholesale Demand Response reform, so new technologies and companies can thrive without coal generators and retailers acting as gate-keepers, thwarting competition
  • State governments could accelerate coal closures and support system security by rebooting the ACCC’s procurement recommendation (REPI #4) to lead to investment in security services as well as dispatchable energy supply.

“Batteries, demand response and better integration of renewable energy can deliver clean and competitive energy,” said Dan Cass, energy lead at the Australia Institute.

“When Federal Energy Minister Angus Taylor reportedly sought to wrap up the Energy Security Board this year, it was the states which insisted it remain. The historic P2025 redesign presents the states with a once in a generation chance to set a high level of electricity ambition for future generations.

“States are leading the way in climate and energy policy with emissions targets of net zero by 2050 and the P2025 redesign needs to facilitate not obstruct these targets.”

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