Post 2025

Electricity Market Design

Delivering a stronger, lower emissions power system for Australians

The Energy Security Board, in collaboration with the market bodies is transitioning the national electricity market into a modern energy system fit to meet consumers’ evolving wants and needs. The post 2025 electricity market design addresses essential change in a world of expanding consumer choices, new technologies, and large-scale capital replacement as old thermal power stations leave the market. Reform is not an option. It’s something we simply must do. Without reform, we can’t achieve the full value that the renewables revolution offers for emissions reduction.

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The 2025 project

The future course of energy investment and operation is at a turning point. The shift to new technologies and renewables is happening at speed and the need for reform is urgent as we lay the foundations for Australia’s new energy future. More consumers and producers are taking up these opportunities. Just one example of consumer choices driving structural change is the rapid spread of rooftop solar, smart appliances and other distributed energy resources that are changing the face of the market. The shift to grid-scale renewables is equally important. Australia’s power system may well become the most decentralised in the world.

This work was requested by the nation’s energy ministers in March 2019. It is all about resetting the national electricity market so consumers can benefit from rapidly changing technologies in our power system.

…unlocking the value of flexible demand and distributed energy resources.

…working alongside government schemes which are delivering on their policy commitments including emissions reduction

…clear signals for timely and efficient investment to deliver reliable, secure and affordable electricity for consumers.

The ESB’s final advice to governments, developed in consultation with consumer and industry representatives, is now complete. Its recommendations are currently before energy ministers on the Energy National Cabinet Reform Committee for consideration. Some reforms foreshadowed in these recommendations cannot wait and work is already underway, with much more to come. This reform package as a whole is essential, not optional, to allow us to meet our future energy needs. The good news is that innovative technologies we will need to complete the power system’s transformation are already available today.

Final advice in pictures

The rapid shift to renewables has seen Australia outgrow the way it prices and delivers electricity. These infographics at a glance summarise the substantial changes needed to unlock the benefits of change for consumers. Grid congestion has to be managed so wind and solar is not wasted. Investment in a mix of firm, flexible and variable resources needs to be encouraged in a new-look market now based on different economic behaviour in a high renewables system with low-to-no-fuel costs.

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The post 2025 reforms

Electricity sits at the heart of our economic, cultural and social well-being. It provides light in the darkness, cooks and stores our food and warms our homes. It runs our machines, providing the energy we need to innovate for the future. Electrification of transport and other industry sectors is a key part of the global agenda to lower emissions. The energy market underpins activities across the Australian economy. Getting the energy market settings right will support initiatives to drive decarbonisation across the board.

Changing the way electricity is generated, transported and used is a huge undertaking and urgent. This isn’t just a tweak around the edges. We are designing an entirely new, modern digital energy system that is already taking shape.

Recommendations now before government. They are designed to fix immediate problems; begin implementation of what needs to happen next; and set up pathways forward so everyone has clarity and confidence about what must be done.