Reforming Australia’s electricity market

Lessons for the UK

December 23, 2021

Following a regional blackout in 2016, the Australian Governments established review of their electricity market. In October this year, Ministers approved a package of reforms to Australia’s National Electricity Market. This report explores the Australian reforms and looks for lessons for the UK.

Despite their very different climates, the British and Australian electricity markets face similar challenges, in particularly accommodating more wind and solar farms. To address this, the Australian reforms include a bespoke form of “local electricity pricing”, something that Policy Exchange has previously called for in Britain.

However, the Australian reforms include a major carveout for existing generators and some new wind and solar farms, which the report argues will raise bills compared to a fully-reformed market.

To advance reforms in the UK, the report recommends that the Government establishes a “Wholesale Electricity Market Review”, building on the success of the “Offshore Transmission Network Review” (OTNR), which aims to coordinate the development of offshore wind farms in UK waters.

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Ed Birkett

Head of Energy and Environment (2020-2022)

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