AUSTRALIA Law and Practice Contributed by: Alexander Danne, Roy Groom, Rohit Venkat and Georgia Summerhill, Clayton Utz
1.7 Announcements Regarding New Policies As discussed in 1.5 Central Planning Authorities , the AEMO has recently released its 2026 ISP which sets a roadmap to 2050 reaffirming a commitment to a low-cost transmission through the use of storage systems. As also mentioned in 1.3 Foreign Invest- ment Review Process , the recent Federal Budget has highlighted a strengthened commitment to clean energy projects and the integration of small-scaled distributed resources. 1.8 Unique Aspects of the Power Industry Australia’s power industry is distinguished by several characteristics that set it apart globally. Consumer Energy Resources and Storage Australia has one of the highest rates of rooftop solar adoption in the world, with installations continuing at pace; 437 MW of rooftop solar capacity was installed in April 2026 alone. In 2025 alone, home battery instal- lations were rolled out at a scale of power capacity equivalent to the Snowy Hydro-Electric scheme. Com- plementing this, Australia ranked as the third-largest grid-scale battery market globally in 2025, reflecting a rapid build-out of storage to firm intermittent renew- able generation. Data Centres and AI Infrastructure Australia is experiencing a significant data centre and AI infrastructure expansion, with over 160 opera- tional facilities and a reported pipeline exceeding AUD155 billion in new projects, driven primarily by cloud computing and AI demand. Under the Austral- ian AI Data Centre Guidelines, new developers are required to “bring your own” power by funding addi- tional renewable generation, entering into long-term power purchase agreements and supporting grid sta- bility, ensuring that the energy costs of these facilities are not passed through to ordinary consumers. This framework presents a substantial opportunity for fur- ther renewable energy investment. Favourable Renewable Energy Conditions Australia benefits from exceptional natural condi- tions for renewable energy generation. Solar irradi- ance levels rank among the highest globally, par- ticularly across inland and northern regions, making utility-scale and rooftop solar highly productive. The
southern and western coastlines, along with elevated inland areas, offer consistently strong wind resources that support a growing fleet of onshore and offshore wind projects. These natural advantages underpin the economic competitiveness of the renewable transition and position Australia favourably to meet its emissions reduction targets. Gas as Dispatchable Firming Gas-powered generation continues to perform a critical firming function within Australia’s electric- ity system, providing dispatchable capacity during periods of low renewable output, high demand and system stress events. While gas contributes a rela- tively modest share of total generation, its flexibility and rapid-start capability make it essential for main- taining reliability as the system transitions away from coal-fired baseload. A prime example of this can be seen in South Australia where generation tends to be 100% wind, although, when there are wind droughts, the state relies heavily on gas-fired power. Since the decommissioning of SA’s last coal-fire power station in 2016, structured future planning around a reliance on gas infrastructure during weather lulls. The NEM operates as an energy-only gross pool mar- ket. All scheduled generators submit price-quantity bids to the AEMO, which centrally dispatches gen- eration on a merit-order basis in five-minute intervals. The spot price is determined at the regional reference node for each of the five NEM regions (Queensland, New South Wales, Victoria, South Australia and Tas- mania), meaning that the market uses regional rather than nodal pricing. A market price cap of AUD23,200/ MWh applies, alongside a cumulative price threshold that triggers an administered price of AUD2,225,900/ MWh if sustained high prices are reached over a sev- en-day rolling period, protecting market participants from prolonged extreme pricing events. The spot mar- ket is supported by the Frequency Control Ancillary Services (FCAS) which uses storage and fast-acting generation to maintain the grid’s frequency. 2. Market Structure, Supply and Pricing 2.1 The Wholesale Electricity Market
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