We welcome the draft report’s recommendations for greater investment certainty, but the detail will be critical to success.
The National Electricity Market (NEM) wholesale market settings review, also known as the Nelson Review, is the biggest review of the electricity market since the Finkel Review in 2017.
Adapting wholesale market settings in the NEM is essential as Australia transitions from a centralised electricity system run on fossil fuels to one powered by firmed renewables.
The Clean Energy Council welcomes the Nelson Review’s recommendations for reforms to the current market settings to help build investment certainty for large-scale renewable clean energy projects, support essential systems services to deliver reliability in the grid and reward consumer participation from home solar and battery systems.
Following detailed member engagement, we are calling for further analysis and refinement, including:
- More design work on the proposed Electricity Services Entry Mechanism (ESEM) to understand and assess impacts on competition, consumer bills, and investment risk. we encourage embedding the ESEM into National Electricity Law to give investors the certainty they need.
- More support for longer-term and developing sectors. We want to see how the ESEM can support pumped hydro and believe a bespoke revenue mechanism, co-designed with states, is needed to help offshore wind take off to support a crucial piece of the energy mix.
- Further work and engagement with industry on the role or financial derivative markets and specific contract designs that could offer longer-term certainty for investors.
- More work on market development to deliver least-cost essential system services and deliver a reliable system efficiently.
- Further analysis to ensure incentives for participation in markets by consumer energy resources (CER) preserve consumer choice and promote industry competition. Government incentives for investment in CER should also be supported through federal, state and territory targets.
- Continuation of the working groups and the establishment of new technical working groups to build out the detail needed for final recommendations. Ongoing transparency and consultation with industry and consumer bodies is critical for adoption.
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