The transition to low emission energy sector
The WEM in the South West Interconnected System (SWIS) is undergoing an unprecedented transition to a low emissions energy system. Both demand profile and electricity supply sources are rapidly changing. Over the coming years more renewable generation will enter the market, energy storage technology will continue to be deployed and improve in capability, and older, more carbon intensive generation will retire.
Improving investment certainty in the Wholesale Energy Electricity Market
To address the challenges of the energy transition, the Coordinator of Energy (Coordinator) has commenced several WEM reviews since the start of 2022. The most significant are the Review of the RCM and the WIC Review.
Attracting new investment
Initiative 2 of the WIC Review, which was announced in May 2023, offers a 10-year fixed price for “proponents of new flexible technologies, such as long-duration storage”. This creates incentive for investment in these technologies and will allow more variable renewable generation to connect without compromising reliability.
The key goal of this policy is to encourage long-duration firming technologies, not necessarily nascent technologies or technologies that are new to the SWIS. The current proposal is to allow a 10-year fixed capacity price for any new facility that:
provides firm availability over a period that exceeds the prevailing storage duration requirement; and
uses a renewable fuel source (if not a storage facility) – for example, a thermal facility running on renewable hydrogen would be eligible.
Any new storage that can meet a new duration requirement in advance of the relevant Capacity Year will have its Reserve Capacity Price guaranteed for 10 years.
Information on other current and past Energy Market Reviews are available here and the Scope of Works for the WIC Review is available below.
