Market Review: Open


The electricity sector transition that is currently under way is changing the dynamics of the power system, including the generation mix
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The electricity sector transition that is currently under way is changing the dynamics of the power system, including the generation mix. Traditional thermal plants are closing, and more renewable and asynchronous generators are coming to the power system.

The transformation of the electricity system is also leading to a small number of large and more centrally located generators being replaced by a large number of relatively small, flexible, asynchronous and geographically dispersed generators. In the next 10 years alone, generation roughly equal to the current size of the national electricity market (50 GW) is expected to connect to the grid. The NEM will replace most of its current stock by 2040.

In addition, the networks across the NEM are becoming more meshed and interconnected, with this resulting in increased inter-regional trade and sharing of reserves between jurisdictions.

Substantial and timely transmission infrastructure is therefore likely to be required. These changes mean that there is a need to have a better way of co-ordinating generation and transmission investment decisions in order to better facilitate the transition that is occurring.

Proposed access model

As part of the development of the reforms to better coordinate generation and transmission investment, on 14 October 2019, the AEMC a discussion paper outlining a proposed access model. 

The proposal model is to introduce locational marginal pricing and financial transmission rights in the NEM.  

These changes are expected to have a number of benefits to the operation of the NEM both in an operational sense and by improving the signals for investment in generation and transmission. Key benefits include:

  • Generators and storage will be able to obtain more certainty over the operation and revenue of their assets, promoting contract market liquidity both between regions and within regions
  • Generators and storage will have improved incentives to locate in areas of the network, which are more beneficial for the power system
  • Consumers will benefit by having TUOS bills lowered as a result of generators sharing some of the costs of transition
  • AEMO and networks will have better information to incorporate into planning and investment decision-making process

Update paper

On 19 December 2019, the AEMC published an update paper for COGATI review that provides further information and context on the review to stakeholders ahead of the final report. The update paper: 

  • revises the proposed date for implementation of the access model to being at least four years after the time that the rule change to deliver the access model is finalised. 
  • outlines how we intend to continue to consult with stakeholders 
  • sets out what quantitative analysis we will undertake as part of the review.

Next steps

At its 22nd meeting on Friday 22nd November 2019, the COAG Energy Council agreed that it will consider the COGATI final report, which will outline the final proposed model, implementation dates and approach, at the March 2020 Energy Council meeting. In light of this, the final report for this review will be provided to the COAG Energy Council in March 2020.


Energy Security Board’s work on transmission

On 19 December 2018 the Energy Security Board provided a report to the COAG Energy Council outlining how the ISP could be actioned,  and how ISP projects could be delivered as quickly as possible. One of the recommendations made by the Energy Security Board was that congestion and access issues should be examined in 2019. The ESB is currently progressing its work on Actioning the ISP, and the Commission is working closely with AEMO on this. The ESB has recently published a consultation paper and accompanying draft integrated system plan rules changes for consultation.

The AEMC’s work on the COGATI reforms

The AEMC must report every two years on drivers that could impact future transmission and generation investment, in accordance with terms of reference from the COAG Energy Council.

The inaugural Coordination of generation and transmission investment review (COGATI), completed in December 2018, made recommendations for comprehensive reform to the way investment in generation and transmission is coordinated.

In February 2019 the AEMC started the second COGATI review.


On 1 March 2019 the AEMC published a consultation paper to commence consultation for the COGATI implementation – access and charging review.

On 4 April 2019, the AEMC published a supplementary information paper which provided additional information and context to stakeholders on the need for COGATI reforms. The paper also provided answers to frequently asked questions about the proposed access model.

On 27 June 2019, the AEMC published a directions paper which provided further detail on the proposed access model, including a discussion of implementation and transition issues. 

 On 14 October 2019, the AEMC published two discussions papers; one outlining a proposed access model, and another discussing renewable energy zones. 

Audio presentation

On 11 April 2019 the AEMC published an audio presentation which provided further explanation of one of the proposed models for reform: dynamic regional pricing. The audio presentation can be found here.

Technical working group

The AEMC formed a technical working group of experts from industry, market bodies and consumer groups to consult on the proposed reforms. Representatives are from, amongst others:

  • Australian Energy Council and its members
  • Australian Energy Regulator
  • Australian Energy Market Operator
  • Infigen Energy
  • Australian Renewable Energy Agency
  • Aurizon Network
  • Clean Energy Council and its members
  • Clean Energy Finance Corporation
  • Energy Consumers Australia
  • Energy Networks Australia and its members
  • Monash University
  • Public Interest Advocacy Centre
  • Energy Security Board
  • ERM Power

The group will provide technical input into the development and assessment of the proposed reforms. 

The AEMC has convened four technical working group meetings:

  • on 28 May 2019
  • on 14 June 2019
  • on 5 September 2019
  • on 15 November 2019.

The discussion notes from these meetings can be found below.

Public workshops

The AEMC held a public forum on 8 July 2019 in Melbourne to discuss the proposed access model proposed in the COGATI directions paper. The AEMC also held a public forum on 18 October 2019 to provide an overview of the proposed access model, and seek stakeholder feedback. A recording of the webcast from this workshop is available here.

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AEMC documents


Late submissions