Towards the end of 2021, National Cabinet approved the Energy Security Board (ESB) Post-2025 market reforms.
The reforms seek changes to the National Electricity Market (NEM) design to enable the continuing provision of the full range of services to customers necessary to deliver a secure, reliable and lower emissions electricity system at least-cost as we undergo the energy transition.
As part of the ESB’s integrated engagement to progress on the Post-2025 market design, AEMO is leading the development of a ‘NEM Regulatory and IT Implementation Roadmap’ to navigate the breadth of ESB reforms over the coming few years, de-risking delivery and informing implementation timing.
NEM Regulatory and IT Implementation Roadmap
AEMO’ Executive General Manager – Reform Delivery, Violette Mouchaileh said: “The ‘roadmap’ will help avoid unnecessary or duplicative costs, and identify where strategic investments, such as IT systems and business processes, can be made to deliver efficient outcomes for AEMO, market participants and consumers.”
Building on the momentum of AEMO’s recent stakeholder engagement programs, including the 2022 Integrated System Plan and Five Minute Settlements, AEMO will develop the ‘Roadmap’ with stakeholders through the Reform Delivery Committee (RDC).
Demonstrating a commitment to working transparently and collaboratively with industry, the RDC consists of nominees from the market bodies, NEM participants, consumer and representatives of the renewable energy, demand management and energy efficiency industries.
“The RDC enables a collaborative process, incorporating a broad set of perspectives by empowering committee members to act as representatives of their nominating stakeholder organisations and provide the views of those organisations as input to the NEM 2025 reforms implementation process and timelines,” Ms Mouchaileh said.
“Importantly, the committee’s focus is on the implementation of reforms, rather than policy development”, she said.
To date, AEMO has held four committee meetings and four workshops (presentations are published on AEMO’s Reform Delivery Committee webpage). Further committee meetings are planned this year, along with further workshops to develop bundling, sequencing and prioritisation of initiatives in roadmap form.
The Committee is targeting publication of the first version of the NEM Regulatory and IT Implementation Roadmap in late April 2022.
AEMO’s role in ESB-related reform design
Complementing its role with the Roadmap, AEMO is also working with the ESB and its members, the Australian Energy Regulator and Australian Energy Market Commission, progressing four reform workstreams and associated initiatives, including:
- Resource Adequacy Mechanism including a Capacity mechanism: developing the designs to create a clear, long-term signal for investment, in both existing and new dispatchable capacity.
- Transmission reform and congestion management mechanism: consider the case for and form of a congestion management mechanism to ensure market signals for transmission locational decision.
- DER Integration and the Essential System Services: progress and deliver a number of initiatives within these workstreams to maintain the system’s secure operation and unlock value for consumers.
Another workstream, data strategy, has been added, recognising the importance and value that digitalisation and data will provide to consumers, industry, operators and regulators during the transition of the energy system. AEMO is providing input into reform initiatives including data services, network visibility, bill transparency and data associated with electric vehicles.
“Together, AEMO’s contribution to reform design and in-depth stakeholder consultation is critical to design and operate a sustainable energy system that provides safe, reliable and affordable energy today, and to enable the energy transition for the benefit of all Australians,” Ms Mouchaileh said.