ESB and Cornwall Insight Australia provide final advice to energy ministers

Last week, the Energy Security Board (ESB) released its recommendations for the redesign of the National Electricity Market (NEM). Cornwall Insight Australia (CIA) was engaged by the ESB to assess the potential benefit of the proposed essential system service reform package for system strength provision.

The report detailed that these benefits arise both from more cost-effective investment and sharing of system strength assets, and more efficient use of the existing generation fleet that supplies this service at operational timeframe.

It also stated these reforms deliver a robust power system that can endure the transition to a low emissions system and harness the benefits that renewable energy has to offer.

George Wong, Senior Modelling Consultant at Cornwall Insight Australia, said:

“To date, system strength shortfall has caused ongoing connections delay and operational curtailment for renewable assets across the NEM. To enhance the provision of system strength in the NEM, the ESB has proposed to introduce reforms targeting both the investment and operational timeframes, including the Unit Commitment for Security (UCS), the System Security Mechanism (SSM) and TNSP system strength procurement mechanism reforms.

“Our current modelling found that the potential net benefit of the proposed reform package is approximately up to $1.2Bn in Net Present Value over the modelling period, which covers the period between financial years 2022/23 to 2039/40.”

The figure below (Figure 21 of the ESB Report Part B) shows the cost difference breakdown by year, over the modelling period for the upper bound scenario. Comparing capital expenditure (CAPEX) and operating cost (OPEX), we can see the resulted net benefits for the reform package.

Figure 1: Overall cost difference by year and expenditure type for upper bound scenario

More information on the report and recommendations can be found here: https://esb-post2025-market-design.aemc.gov.au/

Related thinking

Commercial and market outlook

NEM power price trends

This report provides captured power price trends for the Queensland energy market (neutral case in line with AEMO's ISP Progressive Change scenario) from 2022 up to 2041 using outputs from Cornwall Insight Australia’s latest NEM Benchmark Power Curve (BPC), published on 18 December 2022. With additional commentary on the key...

Regulation and policy

Global shocks but energy transition powers ahead – 2022 year in review

It goes without saying that 2022 has been a tumultuous year for energy worldwide, and Australia was no exception. The unprecedented suspension of the NEM in June 2022 exposed fragility in Australia’s energy market, which could not withstand the shock of high energy commodity prices caused by the Russian invasion...

Regulation and policy

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...

Commercial and market outlook

Australian Power Price Trends to 2041

This report provides captured power price trends for the Queensland energy market (neutral case in line with AEMO's ISP Progressive Change scenario) from 2022 up to 2041 using outputs from Cornwall Insight Australia’s latest NEM Benchmark Power Curve (BPC), published on 26 October 2022. We hope this information is of...

Announcement

Australian FCAS power price trends

This report provides power price trends for the technology enablement as a percentage of total market share, using outputs from Cornwall Insight Australia’s latest Frequency Control Ancillary Service (FCAS) price curves, published on 30 August 2022. We hope this information is of value-add to you and your business. Please don't...

Regulation and policy

Cheapest fixed tariff energy deals £1,700 more than the Price Cap

Due to market volatility, world events and Ofgem's new methodology, our price cap prediction has changed. Please see the latest predictions via our blogs page here Updated price cap figures here Our latest research compiled using Comparison Technologies, has shown the average price of the cheapest ten fixed price tariffs...

Announcement

2021/22 Australian energy insights report

Analytics on key current developments in the Australian energy industry are available Cornwall Insight Australia has released a compilation of Australian energy insights, charts, and analyses. The report includes the topics of energy storage and flexibility, generation (all technologies), power prices, low carbon generation, FCAS, policy and regulation, and transmission...

Announcement

It’s time to choose the Australian Chart of the week of the year!

Each week, the Cornwall Insight Australia team of experts provide complimentary insight on the Australian energy sector through our 'Chart of the week' publication. Four Chart of the week finalists have been selected and we need your help to vote for the Australian Chart of the year winner. By voting...