Post: Key reforms proposed in the 2025 NEM Wholesale Market Review

Key reforms proposed in the 2025 NEM Wholesale Market Review

A report from an expert independent review panel has identified energy storage as a cornerstone for managing variable renewable energy and ensuring grid reliability in Australia.

The National Electricity Market Wholesale Market Settings Review Draft Report, published on 6 August, examines how the market can maintain efficiency while also enabling the significant investment required for a clean energy future.

The review makes nine key recommendations:

• to retain the real-time energy-only spot market as the core mechanism for efficient dispatch, rather than introducing capacity markets or locational pricing
• to require a broader range of price-responsive resources to be visible in the market by 2030, including aggregated consumer energy resources and large flexible loads
• to focus government support for consumer energy resources on enabling them to participate in the market, ensuring that households can benefit financially from their flexibility
• use the rule change process to address risks such as excessive rebidding and algorithmic bidding, and to improve transparency around battery storage levels
• to review market price settings, keeping them linked to the value of customer reliability but providing a fifteen-year outlook to support long-term contracting
• to establish an always-on market making obligation so that a small number of core derivative contracts are available for trading in every region of the National Electricity Market, boosting liquidity and accessibility
• to improve the availability of market information by extending generation availability forecasts from three to five years
• to launch the ESEM itself, using competitive reverse auctions to award long-term contracts that address risks the market cannot manage, while recycling those contracts back into the market when possible
• to align policy, regulation and innovation programs with the ESEM, ensuring that emissions targets, interconnector arrangements and government investment schemes work together to support market stability.

According to the report, these reforms could mean more stable prices, as stronger hedging tools and better integration of flexible demand. A more predictable investment environment would also reduce the need for ad hoc government interventions, which can create uncertainty.

Stakeholder views on the report and accompanying consultation questions are invited by 17 September 2025.