Briefing Note | November 2021

Post-2025 Review Process

Key Points

Since the end of 2018 the Energy Security Board has been asked to explore whether and how the National Electricity Market should be redesigned for the 21st century.
The review was the result of circular governance: requested by the COAG Energy Council in 2018 at the suggestion of the Energy Security Board. It was initiated to resolve high-level disagreement about the ability of the existing energy-only wholesale market to deliver the security and reliability required as the electricity system is decarbonised.
An issues paper was released in September 2019 and submissions were received by December 2019. Given the scale of the project there has been regular documentation published, including a new consultation paper in September 2020, which outlined 7 different reform areas being considered by the ESB. A further directions paper issued in January 2021 consolidated these into four “areas of need”. The final package of reforms was published in August 2021 and Energy Ministers quietly signed off on the package in October 2021.
The relevance of the Post-2025 review has been diminished by the decision by state governments to reassert control over their local electricity systems. The final package of reforms aims to retain some coherence to market settings by proposing principles for state-based investment schemes and other policies, but compliance with these by jurisdictions will be entirely voluntary.
By its very nature, proposing changes to the design of the market creates additional uncertainty. It could change the value of existing and proposed assets. In principle, the agreement to proceed with the final reforms should help resolve some of this uncertainty. in practice, much detail remains to be worked through, and whether individual jurisdictions go along with the reforms is open to question.

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