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 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.
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).
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.
- Transmission access reform – Directions paper
- Transmission access reform – Infographic
- Transmission access reform – Media release
- Transmission access reform - Directions Paper FAQ's
- Transmission access reform - Technical Forum (5 Dec 2022)
- Transmission access reform - Joint forum pre-read materials
- Tranmisssion access reform - Joint forum presentation slides (25 Jan 2023)
The ESB received 32 submissions in response to the Transmission access reform Directions Paper, and are available below:
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.
On 24 February, Ministers agreed a way forward on the complex issue of transmission access reform. Ministers agreed to immediately implement ‘enhanced information’ reforms to provide east-coast market participants with better information on the optimal location for new generation and storage. Ministers requested the Energy Security Board (ESB) to work with Senior Officials and stakeholders to develop the voluntary Congestion Relief Market (CRM) and the priority access model and to bring forward a detailed design for consideration by ECMC in mid-2023. Ministers decided not to further develop or consider the congestion management model and congestion fee options, ruling out any models using locational marginal pricing.
This project update outlines the ESB’s latest work on access reform and describes the next phase of the transmission access reform work program.
- Transmission Access Reform – Project update
- Transmission Access Reform – Senior Officials and ESB Joint Stakeholder webinar slides
The ESB’cost-benefitit analysis published in conjunction with this project update has identified a substantial net benefit associated with transmission access reform.
Modelling analysis published in conjunction with this project update shows the complexity and risks to the efficiency of operating the market under the current design as we transition tlow-carbonrbon future.
The Energy Security Board (ESB) published a consultation paper on Transmission Access Reform, seeking stakeholder feedback on key design choices that will inform the ESB’s final policy recommendations to Ministers in mid-2023.
The ESB received 28 submissions in response to the Transmission access reform Consultation Paper, and are available below:
The ESB has created two prototype models to run scenarios for the transmission access reform package, including priority access and the congestion relief market (CRM).
- A full NEM CRM prototype
- A seven node, two region, one FCAS model.
The ESB has visualised a handful of scenarios in Power BI to highlight key messages for stakeholders at this stage of the design process.
Users should read the consultation paper to understand the key concepts for priority access and the CRM. It outlines the design changes for the energy market (EN) and the new CRM dispatch.
Users should read the user guide that accompanies both models. It confirms the methodology, source of data inputs and assumptions, and the key information for each tab of the Power BI dashboards so that users can navigate and interpret the scenarios.
References to the dashboards below refer collectively to:
- The dashboard created to visualise the outputs of the full NEM CRM prototype, and
- The dashboard created to visualise the outputs of the seven node, two region, one FCAS model.
Stakeholders are not permitted to commercialise the dashboards or any information contained in them.
While the ESB has endeavoured to ensure the content of the dashboards is accurate, adequate and complete, it does not represent or warrant its accuracy, adequacy or completeness. The ESB does not warrant or represent that the information in these dashboards is accurate, reliable, complete or current. To the extent permitted by law, the ESB and its advisers, consultants and other contributors to the models and the dashboards (or their respective associated companies, businesses, partners, directors, officers or employees) will not be liable for any errors, omissions, defects or misrepresentations in the information contained in the dashboards, or for any loss or damage suffered by persons who use or rely on the dashboards (including by reason of negligence, negligent misstatement or otherwise).
Full NEM CRM prototype (scenarios include the congestion relief market)
Seven node, two region, one FCAS model (scenarios include priority access and the CRM)
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.
In February 2023, Energy Ministers agreed to immediately implement ‘enhanced information’ reforms to provide east-coast market participants with better information on the optimal location for new generation and storage.
The ESB has consulted with stakeholders to test the problem statement and proposed solution, and has developed an approach to improve the information provided to stakeholders to inform decisions about where to locate projects in the NEM including better access to information about the locational characteristics of the power system.
This paper updates stakeholders on how these reforms will be implemented.
- Transmission Access Reform – Enhanced Locational Information
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.
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.
- Transmission access reform – Directions paper
- Transmission access reform – Project Initiation paper (Nov 2021)
- Transmission Access Reform – Consultation Paper (May 2023)
- Transmission Access Reform - Consultation Paper FAQ (May 2023)
- Transmission access reform - Scope of Work and forward project plan (Nov 2021)
- Transmission access reform - Final report explainer (Jul 2021)
- Transmission access reform - Senior Officials and ESB Joint Stakeholder webinar (23 Mar 2023)
- Transmission access reform - Technical Forum (5 Dec 2022)
- Transmission access reform - Detailed Design, Project Initiation (26 Nov 2021)
- Transmission access reform - Forecast congestion in the NEM (9 Sep 2021)