Federal Government releases terms of reference for NEM Wholesale Market Review
In early December, the Federal Government released the terms of reference for the NEM Wholesale Market Review, which it commissioned, inviting stakeholder feedback and participation. The review, led by respected energy economist Tim Nelson, will make recommendations for changes to the National Electricity Market (NEM) wholesale settings to ensure the market continues to provide the right investment signals for new renewable and firming generation.
Feedback has been requested on five main topics: investment incentives, consumer interaction with the wholesale market, the changing nature of energy prices, essential system services, and enhancing competition. The initial consultation period will run until February, with recommendations and the final report to be delivered to the Energy and Climate Change Ministerial Council in Q4 2025.
Australian Energy Regulator releases its Wholesale Electricity Market Performance Report
| The Australian Energy Regulator (AER) released its Wholesale Electricity Market Performance Report in late December, which reviews the performance of the wholesale market over the past two years. For the report period, the AER found that whilst wholesale prices have fallen since the 2022 energy crisis, the market has continued to experience significant and increasing volatility, driven by generator and transmission outages, as well as the variability of wind and solar. The regulator found that while over the past five years new wind and solar could earn enough revenue to cover its long-run marginal costs, without changes, new generation may face challenges due to saturation, particularly in utility-scale solar. The report makes several recommendations, including the need to update the current market design with a credible mechanism to ensure new generation can recover its long-run marginal costs. It also suggests that government needs to support new generation entering the market in a timely manner and ensure diversification of ownership when awarding contracts for capacity. |
