This report has been prepared by the Victoria Energy Policy Centre (VEPC) for the Australia Institute to provide advice to the Energy Security Board’s Post-2025 redesign of the National Electricity Market (NEM). The terms of reference require us to examine the arrangements for the provision of inertia and system strength in the NEM. Inertia refers to the extent to which the power system resists (in micro-second time scales) changes to demand and supply. System strength refers to the extent to which a stable voltage waveform is maintained after disturbances to the system, such as from a short circuit.

A separate discussion paper by The Australia Institute’s Dan Cass summarises the findings of the VEPC report and its implications for the NEM redesign project, which State Energy Ministers are due to debate in June 2021.