Project Summary

In the National Electricity Market (NEM), AEMO, as the market operator, looks to balance and optimise new assets added to the grid. It is increasingly evident the NEM does not operate as a “pure” market. Various policy interventions are distorting minimum system cost outcomes. The initial MEGs study of the NEM (Modelling Energy and Grid Services (MEGS) – a continuing case study) was the first to show the trajectory of total system costs (TSC) in response to various technology additions. AEMO‘s Integrated Systems Planning document (ISP) also shows where demand gaps are and indicate potential generation opportunities from renewables. While we recognise the effect of potential technologies to TSC, there is a gap in understanding the impact of various policy and market mechanisms on the essential elements of a competent grid that is being decarbonised.

This study will look at what constitutes a ‘competent grid’ and how does MEGS take that into account. It will explore the market rules and regulations required to achieve the lowest TSC outcome. The project will also study how MEGS can be improved and how enabling infrastructure projects might impact the TSC. A systematic, review of the value of TSC will provide policymakers and investors a more realistic and informative data on which they can make decisions.

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Available Reports

Keeping the lights on in a decarbonised NEM

Several low emissions technologies are often intuitively dismissed as “too expensive” on an individual asset basis – typical examples are CCS and Nuclear. However, a “lowest cost system” will need both expensive and cheaper technologies because they bring different services to a grid.

A sampling of conclusions include:

  • Grid thresholds for unserved energy (brownout/blackout) will likely be breached as early as 2025
  • The storage requirements required to underpin a “step-change scenario” grid are very large (likely prohibitive).
  • Regular seasonal wind droughts present large vulnerability where the frequency of small successive events have more impact as storage is emptied and not re-filled in time.
  • The lowest cost system will need all technologies – including CCS deployed and available to mitigate fossil fuel emissions.

There are important conclusions from this study that are worth energy stakeholders consideration.

Decarbonising Electricity - The Lowest Cost Path to Net Zero Emissions

The monograph Report explores “Total System Cost” for decarbonising the Australian east coast grid. The systems assessment model developed and used in this work represents a comprehensive treatment of what might constitute the lowest cost power generation asset portfolio system for low emissions.

A system assessment approach is important to minimise decarbonisation costs to an economy

  • All low emissions technologies including carbon capture and CO2 storage (CCS) are essential for the lowest cost system
  • The cost of energy storage is significant, essential and must be included to recognise the total system cost for a low emissions electricity grid system
  • In the absence of technologies like CCS (and nuclear) consumers will pay more than is necessary for decarbonisation. It is estimated to be as high as $20Billion/year to achieve net-zero emissions by 2050.

Outcomes from this modelling have been made available in an interactive easy-to-use website located at:

Policy Levers and Market Mechanisms for Decarbonisation

This report examines current Australian mechanisms available to decarbonise the electricity sector. This includes the effectiveness and limitations of various programs, tools and a raft of policy levers that can be used to deliver decarbonisation

Decarbonising the NEM - A Policy Advice Paper for Achieving Net Zero

This paper provides an authoritative syntheses of current policy options using the MEGS model. It lays out the current state of knowledge for policy instruments and their effective application to achieve decarbonisation within the National Electricity Market (NEM).

The Impact of NEM Constraints on the System Cost to decarbonise the grid

As Australia is comparatively in the early stages of its decarbonisation journey, the MEGS total system cost assessments are undertaken with a “clean slate” – unencumbered by aspirations, policies and technology agenda.

It asks two simple questions:

  • What is the lowest system cost to achieve decarbonisation of the NEM grid?
  • What is the impact to the lowest system cost solutions when a technology deployment is constrained?

What happens when we add big infrastructure to the NEM?

This study examines the value proposition of four substantial upgrades to the NEM.

  • Upgrading Interconnection
  • Large pumped hydro storage
  • Access to CO2 capture and storage
  • Deployment of synchronous condensers for grid support

The approach is similar to a cost benefit analysis, whereby the positive and negative effects of a new technology are all accounted for to determine the overall net cost or benefit to the power system.

Snowy 2.0 and Beyond: the Value of Large-Scale Energy Storage

In the context of targeting ‘net-zero’ emissions by 2050, this report outlines the characteristics of a NEM asset portfolio that has access to very large quantities of pumped hydro energy storage. It demonstrates that to maintain a viable grid system at lowest system cost, even with massive energy storage resources, CCS will be necessary.

The Role of System Modelling in Optimising Planning Decisions: Final collection of reports

Project Name:
The role of electricity systems modelling in optimising planning decisions

Research Organisation:
Gamma Energy Technology Pty Ltd


Geoff Bongers, Andy Boston, Stephanie Byrom


Research Program: Techno-Economic Analysis
Demonstration: General (Techno-Economic Analysis)
Research Focus: Energy scenarios modelling, Techno-Economic Assessment

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