Market Mechanisms and Technology Transition in Australia’s National Electricity Market

Abstract

Abstract Purpose of Review To investigate the interaction between restructured electricity market designs, in particular Australia’s National Electricity Market (NEM), and variable renewable generators. In particular, to examine how the expansion of near-zero marginal cost, variable renewable generators may impact participant incentives and market power. Recent Findings The technology transition may significantly impact bidding behaviour in electricity markets such as the NEM. Summary This paper identifies and explores key challenges including the impact of renewables on electricity market power, incentive structures for variable renewables, potential for exercise of market power in the Australia’s electricity market as well as contracting and bidding strategies for variable renewables.