Nexa Advisory welcomes the opportunity to share our views on the National Electricity Market Wholesale Market Settings Review Draft Report.
Nexa strongly supports the Draft NEM Review’s targeted, in-market reform package. The Panel focuses on fixing real problems in the wholesale market that stymie investment confidence and Australia’s energy transition, rather than creating a new market design that would add cost and uncertainty. This reflects what the market needs – accelerating investment signals and valuing the important consumer contributions.
The Panel has intentionally and correctly rejected a number of previously proposed energy market reforms, including:
- centralised capacity or physical-ahead markets;
- locational marginal pricing; and
- distribution-level markets (instead, enabling CER to participate in real-time market, and through network and retail tariff reform).
We support the following areas as key reforms proposed by the Panel:
- Harnessing CER (including C&I) through short-term market reform and by including demand-side resources in the MMO and ESEM
- Strengthening contract markets to address market concentration
- Orderly coal-exit strategy (ESEM)
- Out-of-market strategic reserve
The success of the NEM Review now hinges on three key enablers which are largely outside the Review’s core scope:
- ‘Locking in’ CER reforms that make demand visible and dispatchable without eroding consumer trust;
- Network tariff reform to reward flexibility and dynamic, cost-reflective tariffs to ensure fairer pricing and efficiency of consumer contributions to the energy market; and
- Accelerating transmission delivery (including market-led and non‑network alternatives) to ensure projects contracted under the ESEM are delivered and connected on time.
In addition to the above areas of support, we urge the Panel to reflect the following actions in their recommendations to the Energy and Climate Change Ministerial Council (ECMC):
- Establish a Commonwealth Energy Coordinator-General role to oversee implementation of the NEM Review in the context of the broader energy transition stream to lead implementation, exercise independent oversight and drive delivery as intended across market bodies and jurisdictional agencies. This should be a role that coordinates across whole-of-government and market bodies across the various streams of the clean energy transition.
- Initiate an independent NEM-wide transmission review to determine how to plan and deliver the necessary transmission infrastructure needed to connect the necessary renewable generation and storage.
Read our submission here: Nexa Advisory – NEM Review Draft Report submission