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Audio podcast

Security and stability in the NEM: energy futures seminar

27 Jun 2017

The final report from the 'Independent Review into the Future Security of the National Electricity Market' led by Australia’s Chief Scientist Dr Alan Finkel, was presented at The University of Melbourne on Thursday 22 June as part of our second Energy Futures Seminar for 2017, co-hosted by the Melbourne Energy Institute and the Grattan Institute.

Dr Finkel was joined by Audrey Zibelman, CEO of the Australian Energy Market Operator, Tony Wood, Director of Energy Programs at the Grattan Institute, and Sabra Lane, Journalist and Presenter of AM on ABC Radio. Discussion focused on what the findings from Dr Finkel’s recently released report will mean for the future of the NEM.

Both the report and Dr. Finkel’s presentation emphasised the importance of achieving security, reliability, cost and emissions objectives for the NEM.

Dr Finkel said ‘Our vision with this report is for Australia to have a world-class electricity system that supports our economy and prosperity. We found that the ‘business as usual’ case is not sustainable – we need to manage the transition going forward, and we need to optimise the energy system. The review proposes we can achieve this through an orderly and managed transition, comprehensive system planning, and stronger policy and governance. The Commonwealth Government has accepted 49 of the 50 recommendations, which we are very pleased with, and we look forward to working with the government through this transition.’

In her own presentation, Ms Zibelman said ‘Energy market design and regulation are the main issues in the sector. The Australian Energy Market Operator’s job is to make sure the needs of consumers are being met, and we support the recommendations made in this report. The greatest threat to markets is power insecurity, and the government must deliver the essentials.’

Mr Wood ended the panellists opening remarks, saying ‘The report, while not perfect – and frankly no report of this kind was ever going to be – is a very good start. We must balance market and regulations; the Energy Security Board proposed by the report is a good proposal but will be a challenge at state level. Nostaligia for energy prices has no place in this debate. Just as we cannot go back to candles, nor are electricity prices going to go backwards.’

There was significant discussion with the audience covering the emissions abatement trajectories used in the report, as well as the report’s recommendations on generator reliability and security. Several audience members questioned whether the report goes far enough in its plan for decarbonisation. On this, Dr Finkel said ‘if we can achieve the outcome trajectory that we want, we should use the mix that has naturally unfolded to deliver the best system.’

As part of the Review, the Melbourne Energy Institute was commissioned to assess the security of the power systems that might arise under different emissions reduction policy scenarios. This work was led by our Chair of Power Systems Engineering, Prof. Pierluigi Mancarella.

Our work supported the Review’s findings that business as usual is not an option. Regardless of the abatement policy chosen, operation of the NEM must be reformed in order to maintain system security and reliability.

Our work then suggested how a range of emerging technologies and services could take part in a reformed NEM to enhance system security. Such measures include demand response, energy storage of several forms, and synthetic inertia in newer wind turbines, all of which can provide Fast Frequency Response (FFR).

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