Australia’s electricity system is changing rapidly as coal-fired power stations close and new renewable ones come online. Australia must successfully navigate through this ‘coal closure era’ to be well-positioned for a prosperous future.

But there is mounting evidence that the National Electricity Market (the NEM) may not be able to deliver enough investment in low-emissions generation, storage, and transmission, when and where it will be needed.

Governments and industry now face the task of encouraging investment in decentralised, intermittent sources of generation and integrating these into the NEM, in a context of demand that is flat now but likely to rise later, and ageing, unreliable coal generators. Signs are that this is not going well. The way forward lies in recognising that two distinct eras lie ahead for Australia: the coal closure era, and the post-coal era. The challenges in each of these eras are different, and require different approaches.

This report identifies three priorities for planning the net-zero energy system:

1. Designing a market structure that will help ensure adequate energy resources in a high-renewables system.
2. Signalling the introduction of an enduring carbon price for the energy sector, to guide future investments and gas plant closures.
3. Integrating and coordinating so-called distributed energy resources such as batteries and rooftop solar.