Energy Security Board: Post 2025 Market Design, Options – A paper for consultation

The Energy Security Board (ESB) was established by COAG to develop required changes to the National Electricity Rules to meet the changing needs of the Australian electricity market.

In this context the ESB has released an options paper seeking submissions on a range of reform proposals.  Proposed reforms are divided into immediate reforms, initial (near term) reforms and next (longer term) reforms.

The four areas of focus of the reforms are system reliability, system security, effective integration of distributed energy resources and facilitating effective access to, and development of, the transmission system.

Key areas for consideration include:

1. Facilitating an orderly exit of thermal generation on terms that preserve the reliability of the system;
2. Modifications to the retailer reliability scheme including to take into account the exit of aging thermal generation and the need to contract with replacement resources (including storage);
3. Ensuring appropriate incentives to facilitate increasing introduction of storage, new forms of dispatchable resources and demand side management but on terms that do not adversely impact reliability or customer affordability;
4. Redefining frequency control arrangements;
5. New system security mechanisms including mechanisms to facilitate short term procurement of system security;
6. Potentially implementing a spot market for procurement of inertia;
7. Better integration of distributed energy resources into the power system; and
8. More effective mechanisms to ensure development of the transmission system, including development of enhanced frameworks for establishing Renewable Energy Zones, enhancing the scope of contestable projects, introducing mechanisms for real time congestion management (including appropriate reward mechanisms for new technologies that reduce congestion) and moving to locational marginal pricing and financial transmission rights.

Submissions on the paper are due to the ESB by Wednesday, 9 June 2021.

Stakeholder briefings will be held during May 2021 on dates to be confirmed.