The health of the National Electricity Market 2018

Electricity Electricity demand Electricity distribution networks Australia

This Health of the National Electricity Market (NEM) report is an assessment of how the NEM is functioning now and where improvement is required. The current challenges facing the electricity market and a transition path forward were identified in the Independent Review into the Future Security of the National Electricity Market (the Finkel Review). The Finkel Review highlighted objectives of security, reliability, emissions reduction and customer reward. It noted that delivering on these goals relies on strengthened governance, better system planning and an orderly transition.

The NEM is transforming at a rapid rate. It is moving toward a system that requires the integration of more variable and distributed energy resources, and both chemical and hydro storage. The shift toward more variable and distributed energy resources has been driven by government policies, significant reductions in technology costs and changing consumer preferences. This transformation will continue with the addition of embedded micro-systems, peer to peer trading through block chain capability and, over time, electrification of the transport sector. With these changes, traditional concepts of the way in which the system is managed, how investment should be rewarded, and the role played by supply, storage, networks and consumers must be revisited.

This report assesses the current status and the forward outlook in each of the key areas identified by the Finkel Review and the recently approved Strategic Energy Plan.


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