A Victoria Energy Policy Centre presentation by VEPC Director, Associate Professor Bruce Mountain and and Dr Steven Percy. Victoria Energy Policy Centre, Victoria University, Level 11, 300 Flinders Street, Melbourne Australia on Wednesday 27 March 2019.
The National Electricity Market, a wholesale market covering Australia’s southern and eastern states, commenced operation in 1998. Though the market has long been considered a successful part of Australia’s energy market reforms, econometric analysis finds that coal generation closure in 2017 delivered an unexpected price shock in wholesale markets. Further analysis finds that average prices received by the coal-fired generators when coal generators set the clearing prices, more than doubled in the year after closure compared to the previous year. The conclusions raise concerns about supply-side market concentration, and also about the design, operation and oversight of the wholesale market. This merits serious consideration not least in the context of future coal generation closure.