Policymakers are racing to legislate three new model electricity contracts by the end of March, aiming to replace the struggling Capacity Investment Scheme and accelerate investment in clean dispatchable capacity. The move to enshrine new frameworks for clean energy, battery storage, and gas plants comes as NEM spot prices plunged 61.2 per cent week-on-week to just $20.64/MWh, underscoring the revenue uncertainty facing new projects in a market dominated by daytime solar.
This legislative sprint is part of a much broader, system-level overhaul. In a sign of growing urgency, energy ministers have fast-tracked a consultation to redesign the National Electricity Market, targeting a final agreement on new structures by late 2025. The accelerated timeline reflects widespread consensus that current market frameworks are failing to deliver the timely investment required to manage the transition from thermal to renewable generation.
While policymakers debate market architecture, the project pipeline continues to advance, particularly in New South Wales. At the former Wallerawang coal hub, Akaysha Energy and Greenspot are advancing competing 500 MW batteries, with Akaysha’s 2,000 MWh proposal entering the federal planning queue as Greenspot’s 1,000 MWh project received its environmental approval. Elsewhere, Zenobe’s 360 MW / 720 MWh Noblevale battery in Queensland also secured federal environmental clearance, progressing another major storage asset toward construction.
Despite the policy focus on underwriting revenue, some major developers remain committed to merchant models. Eku Energy’s technology chief stated the CIS has not altered its investment strategy, with the firm prioritising projects exposed to market signals over those with government revenue floors. This commercial approach is being met with technological diversification, as Lava Blue commissioned Australia’s first grid-connected sodium-sulfur (NAS) battery at its Queensland facility, introducing a new long-duration storage chemistry to the NEM.
The imperative to build new capacity is sharpened by the unreliability of the old. AGL’s Loy Yang A Unit 1 experienced an unplanned trip last week, suddenly removing 500 MW of baseload capacity from Victoria. This operational reality was echoed in a new Climate Change Authority report, which recommended Australia cease all coal-fired power generation by 2035 to meet its climate targets. The report also urged a ban on new petrol and diesel car sales by the same date.
Governance of the transition’s key public assets also saw a shake-up. The federal government appointed former Liberal leader John Hewson and ex-AEMO executive Alex Wonhas to the Snowy Hydro board. The appointments come as the market awaits a delayed budget and timeline reset for the troubled Snowy 2.0 pumped hydro project, which has been under review for nearly a year. Meanwhile, long-term technology plays are also emerging, with Line Hydrogen proposing a $1.5 billion Tasmanian project to manufacture 3D-printable floating wind turbines for green hydrogen production.