The Energy Security Board has today issued two new reports on the health of the national electricity market (NEM), saying "real progress" has been made with system reliability, emission reduction and investment but the stability and security of the system, together with "investor confidence" remained "critical".
The Energy Security Board chaired by a highly experienced former senior government officia,l Kerry Schott, said the market needed to be "redesigned" to address its problems and "the speed of change" meant reform was "increasingly urgent".
The two reports are a Health of the NEM 2020 assessment, and a Post 2025 electricity market redesign directions paper.
The 2020 assessment found that falling wholesale and retail prices have improved affordability for most, but "bill-shock" was still a problem.
ESB Independent Chair, Dr Kerry Schott AO, said there are ways to address these issues by redesigning the market but the speed of change means reform is increasingly urgent.
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"The Health of the NEM clearly shows the repercussions of rapid change in our electricity system and highlights the absolute urgency of addressing them," Dr Schott said.
"We are concerned about security constraints in some parts of the NEM and the increasing pressure on distribution networks from growing rooftop solar penetration.
"This, combined with growing large scale renewable generation and low wholesale prices, means it is vital that post-2025 reforms are put in place that can work alongside government policy schemes.
"We're moving in the right direction, but major changes are needed to unlock value to customers and ensure capital investments are made in an efficient and timely manner to deliver the affordable, reliable and secure electricity consumers need."
Dr Schott said "the scope of reform has been narrowed, including removal of proposed measures to deal with the exit of ageing thermal generation, which will instead be addressed through other resource adequacy mechanisms".
A focus on integrating rooftop solar panels into the grid itself was "part of the pathway towards developing a two-sided market in the long term".
"We are focused on modernising the market, unlocking value for consumers and boosting consumer protection, removing red tape and making it easier for businesses to get in and offer the services customers may want to buy," Dr Schott said.
"These reforms address the critical challenges facing the energy sector - affordability for all consumers, reliability and security; renewable energy zones; integrated system plan rule changes, enabling new generators to have adequate access to the grid, and national standards for distributed energy (or behind the meter) resources.
"While many people in the energy sector have different perspectives on the possible solutions or priorities, everyone agrees on the problems we identified earlier in this process. What we have in place now is no longer fit for purpose for the energy transition and beyond.
"The time to tackle these problems is now.
"The market bodies working together have held hundreds of workshops and consultations, spoken to thousands of stakeholders and considered hundreds of thousands of pages of submissions. It's now time for tough, united, decisions. If we keep kicking this further down the road, it's going cost us all more for electricity in the future," Dr Schott said.
She said the Energy Security Board was developing "detailed market designs" ministerial consideration in March, before making final recommendations to government midway through the year.