Australia’s electricity market is at a critical turning point, with households and small businesses positioned to play a defining role in how the nation phases out ageing coal-fired power stations and shifts to renewable generation.
The recently closed review of the National Electricity Market (NEM) has highlighted the need to ensure that everyday consumers are not left behind in the transition.
The National Electricity Market Wholesale Market Settings Review — also referred to as the Nelson Review — was tasked with considering the rules that will govern electricity contracts, pricing mechanisms and participation structures over the coming decades.
Submissions to the review closed this week, as experts and consumer advocates warned that the way the new framework is shaped will directly affect Australia’s ability to accelerate its renewable transformation.
Solar Citizens chief executive Heidi Lee Douglas said that while the current NEM was designed for the energy landscape of the 1990s, the system is now outdated in the face of Australia’s rapid response to rooftop solar.
“The NEM Review will set the electricity market rules for the future — who consumers can contract with to buy and sell energy, how prices will be set and how they will be rewarded, which will impact how quickly Australia can shift to renewables,” said Douglas.
“Our current National Electricity Market (NEM) was designed in the late 1990s, long before the rooftop solar boom.
“It was built for centralised, one-way power flow from large generators (coal, gas, hydro) to consumers.”
Douglas said that with 4.2 million households and small businesses now generating power from rooftop solar — accounting for around 12.8 per cent of Australia’s electricity production and with the potential to double by 2035 when combined with battery storage — it was vital to build an energy system that properly recognises and rewards these contributors.
She added that the NEM Review Panel’s recommendations would determine how fairly home energy producers are treated, urging the panel to seize the opportunity to help create a more democratic renewable energy system that could serve as a model globally.
Consumer energy advocates argue that demand-side solutions — where households and small businesses can shift, store or reduce energy use — have immense potential to lower costs for consumers while strengthening system resilience.
Distributed Energy Consultant Dr Gabrielle Kuiper said demand response and flexible trading arrangements would put consumers at the centre of the renewable transition.
“This important review of the National Electricity Market provides a vital opportunity to ensure that households and businesses benefit from the renewable transition that Australia needs,” said Kuiper.
“To truly benefit households and businesses, tomorrow’s National Electricity Market must focus on rewarding demand-side solutions like smart use of hot water, efficient electric appliances, and electric vehicles, including vehicle-to-grid technology.”
Dr Kuiper said households should be rewarded for adjusting their electricity use to help stabilise the grid and should have the freedom to contract their demand flexibility with providers other than their existing retailer.
She added that fairer pricing and cost-sharing arrangements were needed to ensure low-income and solar households were not disadvantaged, and called for a national scheme to support the uptake of efficient electric appliances that can shift usage away from peak periods.
The recommendations put forward called for a suite of reforms to rebalance the market in favour of smaller participants.
Priorities included rule changes enabling households to directly take part in demand response markets, protection against high fixed charges, reforms to outdated distribution network regulation, and the creation of a single national program encouraging the rollout of smart appliances and flexible demand technologies.
Other proposals urged the panel to empower households and small businesses with the ability to contract energy services through a broader range of providers, not only large incumbent energy companies.
By opening the market to innovative competitors, advocates said, consumers would gain fairer access to both lower costs and new opportunities to earn revenue from their energy choices.
A core focus of submissions was the rejection of higher mandatory fixed network charges.
Advocates argued that such charges disproportionately impact households with lower incomes or those who consume less energy, while blunting incentives for solar and efficiency investments.
Instead, review participants pushed for a market structure that recognises the contribution of millions of distributed energy producers and rewards their role in making the grid more resilient.
“This is our once in a century chance to secure a cleaner, fairer, and more flexible energy future, where households and businesses can fully participate in the rewards of moving to a more flexible, distributed and renewable energy system,” Douglas said.
The review panel is now considering submissions and is expected to release its recommendations in the coming months.
With coal-fired stations shutting down faster than anticipated, industry observers say the decisions made through this process will shape the speed, fairness and security of Australia’s energy transition for decades to come.
