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How might the NEM wholesale market and derivate markets most efficiently evolve to provide signals for investment in firmed, renewable generation and storage capacity?
These markets do not engage with retail consumers who face postage stamp network charges and retail tariffs that are very different from the wholesale market. A large proportion of retail customers have little control over major factors affecting their energy costs as they are renters and/or occupants of strata title properties, or have embedded networks for electricity and/or heat, and fixed appliances. Recent drastic reductions in feed-in prices, such as the recent Victorian Essential Services Commission proposal to reduce FiT prices to 0.04 cents/kWh are undermining community trust in the fairness of energy policy. So-called community batteries that are in the networks don't seem to reward communities in the way that was expected. My recent submission to an AEMC consultation discusses these issues.
Is there a role for certificated schemes to promote investment in firmed, renewable generation and storage and what might these look like?
Certificate schemes do seem to be useful, but they do risk distorting markets towards less cost-effective and low carbon options unless they are very well designed. The recent Victorian government proposal for a certificate scheme for renewable gas is an interesting experiment - submissions to that consultation may provide useful insights for the NEM review.
Could the Retailer Reliability Obligation (RRO) play a role to incentivise new investment if it was expanded in the future?
Could other capacity mechanisms efficiently attract investment in firmed, renewable generation and storage capacity?
Please specify
Often it is the detail in the design and administration of mechanisms that determines their outcomes. And 'economic efficiency' may not be an appropriate criterion for assessment of their value.
How can markets ensure we have sufficient capacity in place when and where we need it before existing resources retire?
It may be that government interventions are more practical, equitable and cost-effective than market mechanisms, or can work to limit market failures.
How do the market settings preferred by stakeholders provide sufficient confidence to consumers and governments that capacity will be delivered?
Retail consumers have little involvement in design and operation of anything beyond retail markets.
How can the NEM wholesale market and any other markets work in tandem to ensure we have appropriate signals for the right type of resources in place when and where we need it?
Strong regulatory action is key.
How can these market settings facilitate emissions reduction in line with the National Electricity Objective and Australia’s international commitments?
See my earlier responses
How do we enable consumers—ranging from large businesses to households with rooftop solar—to benefit from and contribute to the market? Integrating new consumer energy resources (CER) such as electric vehicles (EVs), batteries and solar photovoltaic (PV) has the potential for reducing unit costs by lifting capacity utilisation of the network and generation infrastructure. Lifting capacity utilisation through more efficient use of energy at different times of the day would reduce unit costs and improve outcomes for all consumers.
As noted earlier, many retail consumers have little influence over anything beyond their power points. Energy pricings is a relatively weak driver of behaviour in many cases when consumers see use of electricity as essential for delivery of services they need and when they need them. Postage stamp network charges and retailer tariffs mean many consumers face high fixed charges, so they have limited capacity to reduce their energy bills. In any case, for many consumers energy costs are a relatively small proportion of living costs or business costs.
What can be done to facilitate better interaction between the demand-side, the spot market and any existing or future financial markets?
Develop and market 'plug-in, smart, battery boosted' power sources and appliances that can be sold through appliance retailers, as outlined in my recent AEMC submission.
How might the NEM wholesale market best allow for customers to engage in the market to benefit from their investment in CER, while allowing for different consumers to choose how they engage and continuing to recognise electricity is an essential service with associated accessibility issues for many consumers?
Many consumers interact with the retail market and wholesale prices are a relatively small proportion of their energy costs. Volatile and high spot market prices must be better managed so that incumbent generators and storage units cannot capture windfall profits.
How will prices at different times of the day and year change and evolve with the move towards firmed, renewable energy generation and storage?
The present design of spot markets means that one electricity provider sets the price and encourages gaming and delivers windfall profits to incumbents. The market must be redesigned.
How might the NEM wholesale market and derivative markets allow market participants to most effectively respond to fluctuating prices and manage price risk?
Clear guidelines for behaviour and strong penalties for gaming might help.
What new markets and other measures might ensure they are provided?
Incorporation of smart management technologies into end use appliances and equipment would help. MEPS could be expanded to require these features.
Which entities are best placed to determine what is needed, where and when?
We need strong research to develop end-use solutions to be incorporated into batteries, PV systems and appliances.
To maintain system security and strength, how can we ensure these services are procured before existing plant retires?
Look beyond the present energy supply system.
How can we promote innovation in how these services can be provided at lowest cost?
A combination of aggressive R&D and strong regulatory requirements including appliance and equipment standards
How might we harness the larger number of small resources and growing participation to ensure all markets are increasingly competitive?
Provide appropriate pricing for local use of networks and stable feed-in prices for consumer technologies
