Managing flexibility whilst decarbonising electricity: the Australian NEM is changing

Electricity grid Electricity distribution networks Renewable energy Australia

Australia’s National Electricity Market (NEM) is changing. The changes are driven through both policy interventions by State and Federal Governments, and by international commitments made in Paris. Rising electricity prices are also resulting in changes being driven from the bottom-up, with some consumers now wanting their own generation and storage options, to feel self-sufficient and in control of cost and reliability.

This raises a number of questions and concerns for both the existing generation fleet and new technologies that might be added to the grid.

  • What is needed to maintain a secure and stable grid?
  • Can planners focus on a limited set of technologies to deliver the desired outcomes?
  • What benefits accrue through the NEM to the states each with their unique characteristics?
  • How can we compare the costs of different technologies?
  • How does all this assist in decarbonisation?
  • At what cost is the transformation to consumer and Australia’s competitive position?

The report summary messages are split into four separate messages:

It is important to consider the whole system across all time scales to 2050 and beyond

  • The value of a technology depends on existing grid
  • Chasing intermediate targets whilst ignoring the long term can be suboptimal
  • Energy supply is only one of several grid services

A secure grid requires a range of essential services

  • Traditional grid service suppliers are disappearing
  • Services need valuing to reward existing providers and attract new suppliers 
  • Existing plant can provide many services if flexible
  • Inflexible plant will struggle to survive

The solution will be diverse

  • To resolve the trilemma, a range of technologies will be required
  • Each technology brings a different range of services 
  • Each state has unique problems and opportunities

Providing reliable, low emissions electricity comes at a cost 

  • All low carbon energy forms are more expensive than existing assets
  • Total system optimisation will lead to the lowest cost highest reliability outcomes


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