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Energy: Get NEM design right first


Source: AFR, 30 July 2016

The National Electricity Market of the future will be vastly different to the one that serves the eastern states today.

It will include more high-voltage interstate "interconnectors", and more wind, solar and gas power. It will have more technology to manage the flow and wind and solar, less coal power, and it will have utility-scale batteries to better match supply and demand.

It will also depart from the "energy only" market model to include a "capacity market" – payments to fossil fuel generators to stand by to fill gaps in supply when wind and solar energy can't meet demand.

Before any of this can happen the rules of the NEM need to be rewritten. "The issue now is about the design of the market," says Bruce Mountain, director of energy consultancy CME.

This week Energy Minister Josh Frydenberg put the NEM on the agenda for next month's energy ministers' meeting.

Frydenberg says the network needs to be redesigned to cope with the retreat of coal-fired power and the growth of renewable energy as we shift towards net zero carbon emissions.

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