Yesterday the Energy Ministers of all States, Territories and New Zealand were chaired by the Federal Energy Minister to discuss immediate actions addressing the current energy pricing challenges in the National Electricity Market (NEM). The Energy ministers were briefed by the AEMO, AEMC and AER on the current volatility challenges faced in the NEM.
The Energy Ministers acknowledged the complexity of the soaring electricity prices and agreed that governments must be ready to implement further measures consistent with their domestic and international commitments.
Key New Energy takeaways:
- ISP acceleration – The Energy Ministers appear to agree that to solve the current issues an acceleration of the ISP may be required. However, the discussion of the ISP has brought up capacity markets again.
- Capacity markets, again? The call for a capacity market is back on the table, however, there appears to be an increased focus on New Energy. We have previously commented on the inherent inefficiency and are now awaiting further commentary from the Energy Ministers in July in hope that we learned from past failures.
- Supply chain issues – To address the requirement for clean generation, storage and transmission, the Energy Ministers concluded that all States must collaborate to aggregate New Energy and storage projects across the nation. It was discussed that this may help to identify supply chain and onshoring opportunities for manufacturing and to manage global equipment supply and cost issues. Governmental assistance to manage global supply chain issues could be a much-needed help for New Energy developments.
- The Importance of AEMO – Energy Ministers reminded generators of their obligations to AEMO to maintain up-to-date information. We see the potential for AEMO pushing for further disclosure and operative obligations on generators.
- Supply/Demand reforms – In preparation for the meeting in July the Energy Ministers will consider new supply side and demand side reforms. We anticipate that supply side reforms may directly result in obligations on developers and demand side reforms may affect PPA negotiations.
Watts next?
Energy Senior Officials are tasked to prepare a new agreement to reset existing priorities, frameworks and governance to stabilise the New Energy transition further proposals in the Ministerial meeting in July.
We expect the July meeting to support existing reforms (including the ISP) and progress the Post-2025 market reform work. Lastly, we anticipate that there will be further discussion around a capacity market.
Please reach out to Matt Baumgurtel or Cedric von Duering if you would like to know more.
The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.
