The rapidly changing mix of generation in the National Electricity Market (NEM) has implications for electricity networks – the networks that transport electricity from producers to users. While the network was built to bring electricity from large generators to major cities and industry, new renewables are much more spread out. There is a need to better coordinate new generation and network build to make sure the system overall is built and used efficiently, and to minimise costs to energy users. 

The challenge

The 2022 Integrated System Plan (ISP) forecasts a 9x increase in grid-scale wind and solar capacity and 30x increase in storage capacity between 2022 and 2050. The shift to large-scale renewable generation is driving a wave of major new transmission projects and putting high-voltage power lines on the ground to carry energy to market. Governments are getting involved to deliver this new investment via Rewiring the Nation and various State government initiatives.

transmission, generation and storage investments will help deliver new power supplies at least cost. This is particularly important as the national electricity market replaces most of its aging power stations over the next 20 years. State governments have sought to promote more co-ordinated system development by establishing renewable energy zones (REZ) within their regions.

The work of the Energy Security Board (ESB) aims to support and dovetail with these initiatives. Transmission congestion will increase, even as we build new transmission. The ISP modelling suggests the least cost way to deliver the energy transition is to build more VRE generation than the network can fully accommodate, even if we cannot use all output produced during the sunniest or windiest periods.

Transmission access reform is key to a successful transition. In the absence of reform, actual levels of curtailment are likely to exceed the levels forecast in the ISP. In the current market design, participants receive price signals that make it profitable for them to locate in places, and bid in ways, that do not align with the lowest overall cost to consumers. If we don’t change the transmission access regime, we are likely to end up with a larger generation and storage fleet and transmission network than necessary to achieve the same decarbonisation and reliability outcomes.  

A more coordinated process for bringing new generation online improves the ability to connect to the grid and deliver renewable energy at least cost. The ESB’s reforms aim to increase investment efficiency, cut the cost of generation and storage projects and get new generation to homes and businesses. 

What we’re doing

National Cabinet has instructed the ESB to progress detailed design work on transmission access reform for the NEM. The design process should include a comprehensive consultation process and take into consideration value for money, locational signals and ensuring sufficient flexibility for jurisdictional differences.

The ESB is working to recommend a rule change for a preferred model to Energy Ministers by June 2023.

The ESB has engaged extensively with stakeholders on the detailed design and is working to develop models put forward by stakeholders.

In May 2022, the ESB consulted on four shortlisted models to manage congestion in the NEM, including two models put forward by industry. Since then, we have worked with the Congestion Management Technical Working Group and expert consultants to gain a better understanding of how the shortlisted models would work in practice, and their respective strengths and weaknesses. The ESB has taken on board stakeholder feedback to develop a preliminary hybrid model that mixes and matches the best elements of previous shortlisted models.

The hybrid model is outlined in detail in the directions paper (released November 2022).

Transmission access reform - Directions paper

The ESB published a directions paper on 9 November 2022, seeking stakeholder feedback on the preliminary hybrid model and the detailed design choices within it.

Submissions

The ESB received 32 submissions in response to the Transmission access reform Directions Paper, and are available below:

Acciona Clean Energy Council Energy Users’ Association of Australia Origin Energy
AGL Clean Energy Investor Group ENGIE RES Australia
Alinta Energy CS Energy Energex and Ergon Energy Network Shell Energy
Australian Aluminium Council EDL Finncorn Smart Energy Council
Australian Energy Council Enel Flow Power Snowy Hydro
Australian Financial Markets Association EnergyAustralia Hydro Tasmania Stanwell
Australian Pipelines and Gas Association Energy Consumers Australia Iberdrola Tilt Renewables
Battery Storage and Grid Integration Program (ANU) Energy Networks Australia NEOEN

Joint consultation

At the 28 October Energy Ministers’ meeting, Ministers committed to resolving congestion management as a key near term priority. Ministers tasked Senior Officials to jointly undertake stakeholder consultations with the ESB on the full range of options, with recommendations to be considered at the first Energy Ministers’ Meeting in 2023. The schedule for the joint consultation activities is available here.

Where to next?

The next steps in the congestion management detailed design process are set out below:

Milestone

Indicative Timing

Submissions due on Consultation Paper 21 December 2022
Draft recommendations for detailed design February 2023
Final recommendations to Energy Ministers June 2023

Congestion Management Technical Working Group - Meeting materials

The ESB has established a Congestion Management Technical Working Group comprised of diverse stakeholder representatives. This group will act as a sounding board for the ESB’s thinking on the detailed design of the congestion management model and/or any alternative solution.

Meeting

Materials

Meeting 14: Combined

13 October 2022

  1. Agenda
  2. Slides
  3. Working paper - Integration with the connections regime
  4. Working paper - Options for reducing congestion impact
  5. Meeting Note

Meeting 13b: Operational

21 September 2022

  1. Agenda
  2. Slides
  3. Meeting note

Meeting 13a: Investment Subgroup

15 September 2022

  1. Agenda
  2. Slides
  3. Working Paper – Managing access risk
  4. Working paper – Summary of thinking – TQM as stand-alone model
  5. Meeting note

Meeting 12b: Investment Subgroup 

1 September 2022

  1. Agenda
  2. Slides
  3. Working paper – Congestion Zones
  4. Working paper – Connection Fees
  5. Meeting note

Meeting 12a: Operational Subgroup

25 August 2022

  1. Agenda and Slide pack
  2. Meeting note

Meeting 11: Combined

18 August 2022

  1. Agenda and Slide pack
  2. Working Paper - Congenstion modelling - summary of inputs and assumptions
  3. Working Paper - Role of contribution factors in the transmission queue model
  4. Meeting note

Meeting 10: Operational Subgroup

4 August 2022

  1. Agenda and Slide pack
  2. Working paper - CRM vs CMM
  3. Meeting note

Meeting 9b: Investment Subgroup

28 July 2022

  1. Agenda
  2. Slide pack
  3. Working paper – Timetable for investment work strand
  4. Meeting note

Meeting 9a: Operational Subgroup

21 July 2022

  1. Agenda
  2. Slide pack
  3. Working paper – CMM rebate allocation methods
  4. Working paper – CRM reference paper
  5. Meeting note

Meeting 8:

23 June 2022

  1. Agenda
  2. Slide pack
  3. Working group paper – Summary of submissions to the TAR consultation paper
  4. Working group paper – Initial thinking on connection fees
  5. Working group paper –  Key outstanding questions for resolution
  6. Meeting note

Meeting 7:

12 May 2022

  1. Agenda
  2. Slide Pack
  3. Working group paper – Access allocation options under CMM
  4. Meeting note

Meeting 6:

14 April 2022

  1. Agenda
  2. Slide pack
  3. Working group paper – Physical Access
  4. Working group paper – Preliminary thinking on alternate models
  5. Working group paper – Winner takes all dispatch in the NEM
  6. Meeting note

Meeting 5:

31 March 2022

  1. Agenda
  2. Slide pack
  3. Working group paper- model proponents’ responses to stakeholder queries
  4. Working group paper – Key questions on alternative models
  5. Shell Energy supplementary submission on locational connection fees
  6. Meeting note

Meeting 4:

22 March 2022

  1. Agenda
  2. Slide pack
  3. Working group paper – Revised options and assessment criteria
  4. Working group paper – Breakdown of options for managing congestion
  5. Working group paper – Preliminary assessment of options
  6. Meeting note

Meeting 3:

1 March 2022

  1. Agenda
  2. Slide pack
  3. Working group paper – Objectives and assessment criteria
  4. Working group paper – Related ideas put forward in submissions
  5. Meeting note

Meeting 2:

18 February 2022

  1. Agenda
  2. Slide pack
  3. Congestion relief market presentation
  4. CEIG grid access reform proposal presentation
  5. Meeting note

Meeting 1:

3 February 2022

  1. Slide pack
  2. Meeting note

The ESB’s package of transmission and access reform includes measures to get transmission poles and wires, and generation, built when and where it is needed.

Actionable integrated system plan rules for transmission investment are in place and underway. AEMO is working to prepare its third Integrated System Plan.

Renewable Energy Zones planning rules are being used to progress actionable ISP projects to connect new sources of renewable energy supply. Separate advice on NEM-wide principles to apply to the implementation of REZs was given to Ministers on 3 June 2021 and adopted by National Cabinet on 1 October.

New rules on dedicated connection assets will encourage investment in, and better use of, transmission infrastructure by making it easier for generators to share assets like power lines.

FTI Consulting has examined the forecast prevalence of congestion in the NEM in 2030, assuming that generation, storage and transmission investment occurs in line with the ISP’s step change scenario.

Resources

Papers:

Reports:

Webinars: