Energy Market Alerts service and key alerts

Australia’s energy market is rapidly changing, with increasing renewable generation, exiting thermal plants, and new technologies on the horizon, such as hydrogen.

Policymakers and regulators at the Federal and State levels are grappling with this transition. As a result, it may seem there are a bewildering number of regulatory changes and market developments.

Cornwall Insight Australia’s Energy Market Alert service can pierce through this noise, providing frequent, timely, and concise market updates for those that need to know.

When there are significant market developments, such as a rule change consultation, subscribers of our Energy Market Alert service will receive a concise report outlining the impact on the industry. This allows subscribers to spend more time responding to, planning for, and influencing these changes

Some key Alerts we have reviewed recently are below:

Operational security mechanismAs baseload coal power stations depart the NEM, there will be a greater need for the strength and security services that these synchronous generators normally provide. To address this gap, the AEMC has published a directions paper on a future Operational Security Mechanism. This mechanism will provide a market signal for strength and security services (such as inertia) that will sit alongside the wholesale energy dispatch. Cornwall Insight Australia has released an Energy Market Alert on the directions paper. In our Alert, we review and analyse the impact on the market from this change, including shedding some light on the complex interaction between energy dispatch and this proposed mechanism. 
Amending the administered price cap (APC)The Administered Price Cap (APC) is the price that applies when the cumulative price threshold has been breached. The current APC was deemed a contributing factor to the NEM-wide market suspension in June. As a result, the APC will double from $300/MWh to $600/MWh, with the change effective from 1 December 2022 until 30 June 2025. This change should reduce the chance of future suspensions as it provides headroom for generators to account for current high energy input costs.

Cornwall Insight Australia has released an Energy Market Alert on this change. In our Alert, we analyse the effects of raising the APC, exploring the impacts on the market, wholesale contracts and consumers. 
Transmission Planning and Investment Review (Stage 3)Are speedier transmission approvals on the cards? That could be an outcome of the AEMC’s Transmission Planning and Investment Review.

Major investment in transmission is needed in the NEM to deliver the energy transition. Yet the current regulatory approval framework for transmission investment was designed for a different time when the growth of the grid was incremental, and a major concern was overbuilding. The AEMC’s Transmission Planning and Investment Review seek to update the framework to address the energy transition needs, namely the investment required in the ‘step-change’ scenario of the Integrated System Plan.

Cornwall Insight Australia has released an Energy Market Alert on the Stage 3 draft report, reviewing the options proposed and providing an analysis of their potential implications for the market. 
Reliability Standards and Settings final reportFollowing our Alert on the draft, this Alert looks at the final report from the AEMC’s Reliability Standards and Settings Review. The Reliability Standard declares an acceptable level of capacity in the NEM to meet demand. The tools used to meet the standard are the Reliability settings, the market price cap, the cumulative price threshold, the administered price cap, and the market floor price.

The final report makes recommendations for the three Reliability settings: Increasing the market price cap over time from the current $15,500/MWh to $21,500/MWh by 2027, Increasing the cumulative price threshold from 7.5 hours of the market price cap to 8.5 hours by 2027 (total value in 2027 is $2.193m) Increasing the administered price cap from $300/MWh to $500/MWh These new settings are likely to have a significant impact on the market.

Cornwall Insight Australia looks at the impact of these changes as well as backgrounding the rationale for these decisions.
Gas and coal caps, interventionsOn Friday, 9 December 2022, the Federal Government proposed interventions to address the high cost of domestic energy.   The three main tenets of the proposals are: Temporarily capping the cost of gas to $12/GJ – this will apply to gas producers from December 2022 for 12 months. Applying a ‘reasonable pricing provision’ for gas sales after the cap has expired, and New South Wales and Queensland will (presumably) cap coal prices at $125/tonne. Cornwall Insight Australia has released a brief Energy Market Alert on the proposed interventions. In our Alert, we summarise the key initiatives and provide context for the upcoming battle over the ‘reasonable pricing provision’ that regulates gas pricing going forward.

To request a copy of a recent Energy Market Alert:

Related thinking

Commercial and market outlook

Latest Australia Benchmark Power Curve insight for Q1 2024

Cornwall Insight Australia has released our latest NEM Benchmark power curve (NEM BPC) for Q1 2024 to our subscribers. Our latest data from our recent Australian NEM Benchmark Power Curve shows that policy settings and decarbonisation ambition is likely to lead to a temporary, but significant, increase in wholesale energy...

Regulation and policy

Calm after the storm although transition begins to lag | 2023 year in review

This year saw a return to relative calmness after the energy shocks of last year, while governments are playing an increasing role as the rate of new renewable generation lags. Spot pricing was subdued compared to last year, with no significant unexpected outages that caused sustained price spikes. Higher levels...


Offshore wind now appears in latest ISP

The ISP also forecasts that greater flexible gas generation is needed From Cornwall Insight Australia's Energy Market Alerts service Offshore wind officially appears in the draft 2024 ISP due to state-based offshore wind targets. Figure 1 below from our latest Energy Market Alert, shows the variance in forecast generation between...

Commercial and market outlook

Latest Benchmark power curve insight

Cornwall Insight Australia has released our latest NEM Benchmark power curve (NEM BPC) for Q4 2023 to our subscribers. Our latest edition includes Marinus Link, ESSO constraints and other updates. We have released a free excerpt, which you can access below.The Federal Government has announced a partnership with the Marinus Link...


Capacity Investment Scheme boosted from 6GW to 32GW

From Cornwall Insight Australia's Energy Market Alerts service Last Friday, the Commonwealth announced a major boost to the Capacity Investment Scheme, with the scheme now expected to deliver 32GW (combination of 9GW firming capacity and 23GW renewable generation) – up from 6GW. Cornwall Insight Australia has released an Energy Market...


What are Australia’s emissions reduction targets?

From Cornwall Insight Australia's Energy Market Alerts service Energy laws have now been amended to incorporate an emissions reduction objective alongside the other objectives. The list of targets that the market bodies will need to consider is listed in a separately published Targets Statement. The targets currently listed cover both...


Energy prices tumble in October

From Cornwall Insight Australia’s NEM Market Analysis report With over 700 GWh of rooftop PV added to the NEM since October last year, records were again set in NEM minimum demands along with a high instantaneous renewable penetration within the grid of 71.4%. Once again, the month’s main story was...


Emissions intensity drops for October 2023

From Cornwall Insight Australia’s NEM Market Analysis report This October saw a 12.6% reduction in total emissions (accounting for -1.18 Mt CO2-e reduction) as solar and wind generation has increased significantly. The reduction in emissions may continue with the arrival of Fly Creek and Rye Park wind farms expected soon...