ISF’s submission to the National Electricity Market (NEM) review, informed by over a decade of research with industry and government partners, welcomes the opportunity to establish a plan that moves Australia towards a zero carbon emissions energy system.
ISF recommends this can be achieved by optimally integrating energy efficiency, demand management and energy storage with both centralised and distributed renewable energy supply in a transparent and accountable least cost planning framework.
Australia’s National Electricity Market supplies the states and territories of eastern and southern Australia and is the longest geographically connected power system in the world. It generates around 200 terawatt hours of electricity annually, accounting for around 80 per cent of Australia’s electricity consumption.
Following last year’s blackout in South Australia, COAG Energy Ministers agreed to an independent review of the national electricity market to take stock of its current security and reliability and to provide advice to governments on a coordinated, national reform blueprint.
This blueprint will outline the national policy, legislative, governance and rule changes required to maintain the security, reliability, affordability and sustainability of the national electricity market.
According to Dr Finkel, Australia’s Chief Scientist and Chair of the Review, “We now have a once-in-a-generation opportunity to reform the electricity sector to maximise its resilience in the face of rapid market changes”.
ISF’s submission to the review supports reforms the NEM to move it away from our traditional one-way, supply-focused, centralised electricity system with limited customer participation, sustainability and accountability. In summary, ISF’s submission recommends the Council of Australian Governments (COAG):
- undertake strategic planning on future energy supply needs and opportunities, including the opportunity for energy storage and demand management to provide for reliability and the national benefits and potential to export energy from renewable sources
- reform the NEM governance framework to focus on delivering least cost outcomes
- update the National Electricity Objective (NEO) to include sustainability and equity and ensure it reflects the balance between supply and demand side resources
- develop a clear annual statement of policy intent to guide AEMC and AER in more efficiently applying the National Electricity Rules
- produce an annual NEM Report Card
- implement an efficient Demand Management Incentive Scheme (DMIS)
- reconsider the electricity market Demand Response Mechanism (DRM)
- improve valuation of decentralised energy resources
- champion electricity market rule changes to facilitate (and legalise) both islanding and local electricity trading
- draw on New York’s Reforming the Energy Vision (REV) as an example of how regulators can take leadership in transforming the electricity grid to achieve resilience, climate, innovation and cost goals
- establish a ‘Data Strategy’ for energy and foster consistent standards and protocols
ISF's submission also includes responses to specific questions in the preliminary report of the independent review into the future security of the NEM.
Over 360 submissions were received during the Review’s consultation period. These are available on the Department of the Environment and Energy’s website.
The review delivered its preliminary report to COAG last December and is on track to deliver its final report by the middle of 2017.
Some examples of ISF's well-established track record of independent, evidence-based energy research relevant to the review are:
- The NEM Report Card – how well does the National Electricity Market serve Australia?
- Australian Decentralised Energy Roadmap
- 100% Renewable Energy for Australia
- Virtual trials of Local Network Charges (LNC) and Local Electricity Trading
- Network value of local generation network credits (LGNC)
- Institutional Barriers to Intelligent Grid
- Barriers to demand management: A survey of stakeholder perceptions
- Restoring Power: Cutting bills & carbon emissions with Demand Management
- Network Opportunity Maps
- Networks Renewed
- Assessment of the storage requirement for electricity reliability