The federal government has initiated a review of the National Electricity Market (NEM) to promote investment in firmed reliable renewable energy generation and storage capacity, in preparation for a future without coal-fired power.
A four-person review panel will hand their recommendations to the government at the end of 2025, with recommendations for a NEM fit for purpose to achieve the government’s 82% renewable electricity generation by 2030, and emissions reduction target of 43% at 2005 levels by 2030, which new analysis says is on track to be 42.6%.
The panel will recommend future NEM settings to promote investment in firmed reliable renewable generation and storage capacity following the conclusion of Capacity Investment Scheme (CIS) tenders in 2027.
It will also develop reforms to the NEM, which meet legislated affordability, reliability and emission reduction goals under the Australian Energy Markets Commission’s (AEMCs) National Electricity Objectives.
Options involving the implementation of carbon trading schemes, carbon markets or governments supporting new fossil fuel generation will not be considered.
The review’s lead will be Griffith University Associate Professor of Economics Tim Nelson, who has held roles with Spain-headquartered renewables developer Iberdrola, gentailer Australian Gas Light company (AGL Energy), and the AEMC.
Nelson will be joined by former Australian Energy Regulator Chair Paula Conboy, co-designer of the NSW Energy Roadmap Ava Hancock, and former Boston Consulting Group Senior Partner and energy expert Phil Hirschorn.
Federal Minister for Climate Change and Energy Chris Bowen said the review is vital as electricity demand grows and ageing coal fired power stations exit the system.
“The review will provide a comprehensive assessment of what the market will need next, once the current Capacity Investment Scheme tenders end in 2027, to ensure that investment pipeline remains strong,” Bowen said.
“We’re doing the work now to ensure our grid will be stable and there will be enough clean, cheap, reliable renewable generation and storage to power Australia’s needs.”
The NEM interconnected network covers all states and territories, except Western Australia and the Northern Territory, with around 40,000 kilometres of transmission lines and cables, supplying over 23 million people, and was built to source power from coal-fired generators.
“During its decade of delay and denial, the Coalition made no attempt to address the foreshadowed closure of 90% of Australia’s coal fleet. They continue to ignore reality in calling for these increasingly unreliable generators to be kept open longer than planned, as their only solution to meet Australia’s growing energy needs for the next 15 years or more,” Bowen said.
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