Submission to the Australian Energy Market Commission’s Reliability Frameworks Review

by Tony Wood and David Blowers

Submission to the AEMC’s Reliability Frameworks Review, Friday 7 September

The reliability of Australia’s electricity system is currently a major concern for policymakers and consumers. The AEMC’s Reliability Frameworks Review is timely but appears to have too narrow a focus. The current focus fails to explicitly address concerns about the sufficiency of existing reliability mechanisms and misses the opportunity to canvass alternatives. In particular, the current and future investment environment is more challenging than the AEMC’s Issues Paper acknowledges. More intermittent, zero-marginal-cost generation may mean the existing market no longer provides adequate pricing signals for private investment in new capacity. The Reliability Framework for the NEM should provide a clear set of guidelines, to be followed by the market operator, that covers all circumstances (including a lack of private investment), works as far as possible with the existing market, and is clearly understood by market participants and policymakers.