Rainer Korte, Commissioner

Future Grid Summit 2025

Parkroyal, Sydney

I would like to acknowledge the traditional owners of the land on which we meet today – the Gadigal people of the Eora nation – and pay my respects to Elders past and present.

I'm not sure how many of you have been to Niagara Falls.

I visited there recently and saw the exhibit called "The World Changed Here", which commemorates Nikola Tesla's development of alternating current (AC) — a world-changing innovation that powered major industries and electrified the world. 

It made me think of our own version of "The World Changed Here", the moment we're having right now with the energy transition, which is reshaping our energy system and the global economy right before our eyes.

It's a point we make in the AEMC strategic narrative. We talk about the global energy sector undergoing change on a scale comparable to the Industrial Revolution – but at a much faster rate.

Nikola Tesla was, of course, a leading figure of the Second Industrial Revolution, and it's his work developing alternating current to harness energy from Niagara Falls that's celebrated in the exhibition I saw.

It marks the moment in 1896 when Tesla demonstrated he could generate and transmit electricity from Niagara Falls to Buffalo, about 30 kilometres away.

It was the first long-distance commercial use of the AC system – an innovation that transformed the energy landscape, leading to both industrial growth and the emergence of the conservation and environmental protection movement. 

Almost 130 years later, it is still used around the world today.

As an energy enthusiast, I'm fascinated by how innovations driving the energy transition will be remembered in 2155, 130 years from now.

At the Commission, establishing market and regulatory frameworks that encourage innovation and can adapt to change is central to everything we do.

As most of you are aware, the Australian Energy Market Commission's role is to implement practical rule changes for Australia's National Electricity Market, elements of the natural gas market, and related retail markets.

Additionally, we provide market development advice to governments.

We play a key role in shaping tomorrow's energy market, working closely with governments, other market bodies, and energy regulators.

Our vision is for a consumer-focused net zero energy system.

We want all Australians to benefit from a lowest-cost, low-emissions, reliable, secure and safe power system.

This is critical to decarbonising the economy, supporting national prosperity and giving people confidence in the energy transition.

To that end, we have consulted and reflected on the challenges most likely to require ongoing effort from policymakers, regulators and stakeholders. 

From this work, we published our strategic narrative in September 2024, titled A Consumer-Focused Net Zero Energy System.

This document outlines eight key challenges and opportunities that are critical to achieving a consumer-focused net zero energy system.

These cover everything from ensuring equitable energy outcomes for all households to maintaining energy system security and reliability, as well as securing social licence and the capital and labour necessary for the energy transition.  

We've distilled these challenges and opportunities into four key energy reform priorities, which are guiding our work program for the next 12 months:

• Consumers and CER: Delivering improved consumer outcomes and enabling better consumer energy resource – or CER – integration
• Gas transition: Clarifying the future roles of gas in the net zero transition
• Future markets design: Getting the market designs right for the changing energy systems, and 
• Network regulation: Updating network regulation to support improved consumer outcomes.

We have multiple projects underway across each of these reform priorities – and each represents its own significant body of work.

We are seeing some critical themes emerge through the energy transition.

The first of these is the urgency of the energy transition.

This isn't just about distant 2050 targets. Right now, in 2025, we have ageing energy infrastructure, posing immediate replacement needs.

With that urgency comes the need to ensure investment certainty.

The level of investment required to secure a net zero energy system is unprecedented. How do we create clear, stable regulatory frameworks that enable private capital deployment?

Coordination is another key theme. 

The energy transition involves multiple moving parts, necessitating integrated planning across jurisdictions.

We must carefully manage what we're building AND what we're retiring. We must also successfully integrate a substantial amount of consumer energy resources.

Much of the urgency of the transition lies in our ageing coal plants.

Regardless of emissions reduction policy targets, Australia's coal plants are simply ageing out and becoming more unreliable.

Nearly all of Australia's ageing coal-powered generation is expected to close by 2035, and all of it by 2040.

This infrastructure requires rapid replacement to maintain the reliability and security of the power system.

There is a real risk that replacement generation, storage, transmission, and essential system services may not be available in time for when coal plants retire, and this risk must be actively managed and avoided.

Australia's emissions targets – 43% below 2005 levels by 2030, 62-70% by 2035, and net zero by 2050 – further underscore the urgency of the task ahead.

AEMO's Integrated System Plan (ISP) – the roadmap for the National Electricity Market energy transition – outlines the magnitude of what's required to meet those targets.

It makes it clear that our emissions reduction efforts must occur in tandem with a near doubling of electricity consumption by 2050, as large sectors of the economy, such as transport, electrify.

Another driver of this growth is the development of critical digital infrastructure such as data centres.

It's anticipated that data centre electricity consumption alone could grow fivefold within the next decade, from 4 TWh to 20 TWh by 2034.

This creates both challenges and opportunities.

On the one hand, data centres involve large electrical loads that are mostly connected to the grid using inverter-based technology, like that found in wind and solar farms, which creates new stability risks.

On the other hand, they can provide a stable demand that helps integrate renewable energy, addressing minimum load challenges.

We're seeing major data centre operators signing power purchase agreements, underwriting new renewable projects to power their facilities.

The ISP confirms that renewable energy, connected with transmission and distribution, firmed by storage, and backed by gas-powered generation, is the lowest-cost way to supply electricity to homes and businesses as Australia transitions to a net zero economy.

The 2024 ISP outlook required:

• A six-fold increase in grid-scale wind and solar by 2050
• A fourfold increase in distributed solar PV, and 
• A 16-fold increase in storage capacity to accommodate the growth in electricity usage and achieve net zero.

This outlook will be updated in AEMO's Draft 2026 ISP, which will be released next week. While there will undoubtedly be changes, the key messages and direction of travel are expected to be the same.

The ISP sometimes comes under criticism, but we are so fortunate to have a coordinated plan like this. Many other jurisdictions don't and often wish they did.

The ISP plays a central role in coordinating major transmission investment during an unprecedented transformation of our electricity system.

It also informs regulatory processes and jurisdictional planning programs.

As you may be aware, the AEMC has recently published the terms of reference for the Review of the ISP framework to ensure it remains fit for purpose and that its methodology is robust. 

We will formally initiate this review by publishing a consultation paper later this month.

Earlier this week, AEMO published its second annual Transition Plan for System Security.

The expanded report aims to guide the sector through the next phase of the energy transition, focusing on key transition points and actions necessary to maintain power system stability and security.

The report outlines the steps required to replace the system security services provided by retiring coal plants and unlock the growing potential of renewable energy, including rooftop solar, to help deliver a smooth transition for consumers.

New investments and reforms are needed to maintain system security in advance of these transition points, with opportunities to co-optimise both reliability and system security investments to help keep costs as low as possible.

The AEMO Transition Plan for System Security is a substantial piece of work that clearly highlights the challenges associated with maintaining the technical operability of the power system during a period of rapid transition.

It reminds us that a successful energy transition requires more than just zero-emissions energy.

Separately, the AEMC has worked closely with AEMO to develop rule change proposals aimed at further enhancing the existing system security frameworks outlined in the National Electricity Rules.

We anticipate initiating a formal rule change process to consider these proposals in 2026.

As the ISP demonstrates, the energy transition presents a massive infrastructure challenge for Australia – but also a substantial investment opportunity.

To secure the scale of investment required, we need to address project delivery challenges, including project approval delays, cost pressures, social licence issues, supply chain disruptions, and workforce shortages.

The Nelson National Electricity Market wholesale market settings review outlines reforms to support investment in firmed renewable generation and storage, following the conclusion of the federal government's Capacity Investment Scheme in 2027.

It considers, among other things, the need for mechanisms that ensure reliability, affordability and efficient risk management in a more weather-dependent system.

Its nine draft recommendations are grouped into:

• Short-term measures addressing emerging pressures in the spot market.
• Medium-term measures, countering liquidity and access challenges in the contract market.
• Long-term measures to remove structural barriers to long-term investment.

In the short term, it proposes enhanced visibility of CER, placing new obligations on aggregators to improve integration and participation in the wholesale market.

This recommendation addresses the issue of price-responsive resources becoming increasingly invisible to the market, failing to participate in price formation, and distorting forecasting, which could lead to the overbuilding of grid-scale resources.

Medium-term proposals include an always-on market-making obligation, which would require large market participants to continuously offer tradeable volumes with capped bid-ask spreads, improving liquidity and price transparency.

Over the long term, an Electricity Services Entry Mechanism is proposed as a new framework to support long-duration investment in bulk energy, shaping and firming services.

The mechanism would introduce standardised contracts for projects beyond, say, year seven, helping bridge the 'tenor gap' and reduce investor risk.

The review reflects broader international challenges, such as balancing market efficiency with deep decarbonisation, integrating distributed energy, and ensuring long-term investment signals. 

The review is due to deliver its final recommendations by the end of this year.

A final critical component – and indeed a unique element – of Australia's energy transition is the strong uptake of CER.

And, like other aspects of the transition, this poses both challenges and opportunities.

Consumers are already a major driving force in Australia's energy transition, and this is set to continue. 

My colleague Victoria Mollard will speak more on this shortly.

But in a nutshell:

• Rooftops are already generating enough solar in some regions to meet total demand at certain times.
• Battery storage – both residential and utility-scale – is becoming mainstream.
• EVs are creating new demand patterns and potential grid services.

If CER, like solar panels, batteries and electric vehicles, are enabled to participate actively in the energy system, then not only will CER owners benefit directly, but this will also lower system costs, benefiting all consumers.

Various research studies have shown that if CER is integrated well, it could deliver substantial savings in avoided investment of up to $45 billion by 2050, in net present value terms.

It's essential to have the right regulatory frameworks in place to realise these benefits by encouraging effective coordination and integration of CER.

The Commission has several ongoing and recently completed projects aimed at achieving this goal.

For example, the integrating price-responsive resources rule change, which will enable resource aggregators to participate in the wholesale electricity market, can have a big impact on reducing system costs and delivering benefits to all customers.

Our pricing review, which Victoria will discuss, is considering the changes needed to ensure that competition in the retail market delivers the mix of products and services that consumers value now and in the future, while also delivering a lower-cost system for all consumers.

Publication of the pricing review draft report is planned for next week, 11 December, to be followed by a public forum on 15 December 2025.

The uptake of CER is making distribution system planning more complex. The Commission published a discussion paper last month setting out three different approaches to improve integrated distribution system planning in the National Electricity Rules.

Addressing these challenges will improve transparency for distribution network users, including consumers, who will then be better placed to make informed choices and investments in CER.

In September, we published a draft determination proposing a framework to enable access to real-time data from smart meters.

We believe that all consumers should have access to real-time data as part of their electricity service, enabling them to more readily access the energy services they value.

The proposed draft rule would result in the progressive upgrade of the fleet of smart meters, generally enabling access to real-time data at no additional charge.

Publication of the final rule determination is planned for 18 December 2025.

A common theme that emerges throughout much of our work, as well as the work of others, is that the energy transition offers significant savings for households that electrify their energy use.

Another is that ongoing delays in renewable energy and supporting network investments will increase the cost of the energy transition.

Again, Victoria will speak more about this shortly.

Make no mistake, we are in a 'The World Changed Here' moment.

There is much work to do. However, it's also worth noting the work that has been done and how far we've come to reach this point in the energy transition.

Here in Australia, we are 15 years away from coal-fired power generation being relegated to history. Grid-scale renewable generation and CER are emerging in their place as Australia and the world increasingly electrify.

My home state of South Australia is showing Australia – and the world – what is possible.

The last coal plant in South Australia closed in 2016. 

Wind and solar resources regularly supply more than 100% of electricity demand.

Over 54% of homes have solar panels, contributing to the state's high percentage of 75% of annual electricity generated from wind and solar resources. 

Rooftop solar alone now supplies over 100% of electricity demand at times, and by 2027, South Australia is expected to reach 100% net annual variable renewable energy.

Batteries are playing an increasingly important role, and just last week, South Australian batteries supplied a new world-leading record 40% of demand from stored energy during the evening peak.

An energy revolution is indeed occurring before our eyes, transforming forever the way we use, generate and store energy.

Just as in the days of Nikola Tesla, we need to seize our 'The World Changed Here' moment, a pivotal moment where we all have a part to play, to ensure that the energy transition that is reshaping our energy system and economy delivers benefits for all Australians and people all around the world.