Capacity mechanism high-level design paper released

The Energy Security Board (ESB) has released a paper outlining its proposed high-level design of a capacity mechanism for the National Electricity Market (NEM). The ESB is seeking stakeholder feedback on key issues that will inform the final detailed design recommended to ministers.

ESB Chair Anna Collyer said a capacity mechanism will be a key tool to ensure reliability as the NEM undergoes an unprecedented period of transition.

‘A capacity mechanism – which pays providers to have capacity available during certain periods – will help reduce the risk of a disorderly transition,’ Ms Collyer said. ‘It will provide a more direct and certain way to ensure we have the right amount of capacity and right mix of capacity available when and where we need it.’.

‘This is not a new concept – most markets in the world already operate markets that explicitly value capacity – but it is a big change for the NEM. So we are encouraging all stakeholders to participate in the design process so we can deliver a considered and collaborative design that is fit for the future.’

The ESB is seeking stakeholder submissions on its proposed high level design and the issues raised in the paper with submissions due by 25 July 2022.

The ESB will develop a draft detailed design by the end of the year with a final recommendation due to ministers early in 2023.

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Capacity mechanism high-level design paper