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The Energy Security Board (ESB) has handed down its final advice on critical energy reform in the Post-2025 Energy Market Design.

This advice follows extensive consultation with industry across four workstreams:

  • Strengthening signals to encourage investment in dispatchable generation capacity and the retention of existing thermal generation for as long as it is needed
  • Delivering essential system services
  • Improving transmission and access arrangements to ensure consumers are the beneficiaries
  • Better enabling demand side participation and integration of distributed energy resources.

It includes a recommendation that governments further develop a capacity mechanism to provide the right market signals to drive investment in dispatchable generation. This will be crucial to ensuring that we can absorb renewables into the grid without threatening reliability and affordability. 

The Federal Government says the pace and scale of changes underway in Australia’s electricity system is unprecedented, and it is essential that the National Electricity Market (NEM) remains fit-for-purpose into the future in order to protect consumers from high prices and reliability risks as technologies in the energy sector change.

However, the Clean Energy Council said the ESB’s advice had “missed the mark” that would “create greater uncertainty for new investment in energy generation and prolong the life of polluting coal-fired thermal generation well beyond its use by date”.

Clean Energy Council Chief Executive, Kane Thornton, said, “The ESB’s proposed recommendations represent a missed opportunity to deliver an energy market that will facilitate the transition to clean energy in Australia.”

The Clean Energy Council said the proposal to establish a capacity mechanism was one of the “most distortionary reforms imaginable”, saying that the reforms would make it far more difficult for state and territory governments to meet their emissions reduction targets, and significantly slow the transition to a renewable energy future.

“Not only do these reforms fail to address the critical challenges facing energy investors, it will worsen the enormous uncertainty and risks facing investors and further distort the market,” Mr Thornton said.

Federal Minister for Energy and Emissions Reduction, Angus Taylor, along with state and territory counterparts, will consider the recommendations and present a package for consideration by National Cabinet in late-2021.

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