A new report commissioned by the Energy Efficiency Council (EEC) has found that reforming Australia’s electricity governance will be essential to unlocking the potential of the energy transition.
According to the NEM Governance Reform: Options for the Future Electricity System report, there is an urgent need to overhaul the institutional arrangements associated with the National Electricity Market (NEM).
It sets out broad directions to improve coordination, accountability, and whole-of-system thinking.
Commissioned by the EEC, with the support of the RACE for 2030 Cooperative Research Centre (RACE for 2030), the green paper draws on expert interviews, research and cross-sector consultation to spark discussion and debate, and inform an upcoming white paper.
EEC CEO, Luke Menzel, said despite a huge amount of effort from people working in government, market bodies and industry, the way energy is governed in Australia hasn’t kept pace with the scale and complexity of today’s energy challenges and opportunities.
“We need to back in the efforts of all those professionals by ensuring the institutions in charge of our electricity markets have the remit, resources and support they need to rapidly roll out a 21st century energy system that works for consumers.”
The report identifies seven critical governance challenges, including fragmented responsibilities, gaps in data collection, analysis and strategic advice, and a lack of demand-side coordination.
RACE for 2030 CEO, Bill Lilley, said appropriate expertise and technology needs to come together to rapidly inform the change architecture needed to govern and accelerate the energy transition, whilst maintaining the critical energy services needed for daily life, and to set up the new governance arrangements that will form the backbone of Australia’s future energy system.
“To realise the greatest value of the energy transition for all Australian citizens, the current governance architecture needs to transition from a 19th century centralised approach to a 21st century decentralised one,” Lilley said.
“It needs to shift to an approach that embraces innovative market arrangements, is simple and transparent, and rewards distributed suppliers and demand-side action of all sizes.”
The green paper proposes broad directions for reform, such as clear allocation of responsibility for strategic analysis and advice, increased resourcing for multilateral bodies, improving data and modelling capabilities, strengthening consumer engagement, and ensuring demand-side experts are embedded in governance.
The EEC said the release of the green paper provides an opportunity for stakeholders across industry, government and the broader energy sector to contribute their feedback, which will help shape a white paper with clear reform recommendations. It is expected to be released by the end of 2025.
