At Edge2020, we view the August 2025 draft of the Nelson Review as a timely and pragmatic step toward strengthening the National Electricity Market (NEM) without discarding its foundations.
The Review offers a measured and market-focused approach that acknowledges the evolving nature of Australia’s energy system while preserving the core design features that continue to support efficient outcomes.
Australia’s electricity market has changed dramatically over the past decade. The generation mix is now more weather-dependent, decentralised, and variable. These shifts have placed new demands on the market, challenging its ability to deliver reliable investment signals and maintain system security. The Nelson Review recognises that while the energy-only spot market remains valuable, it must be updated to reflect today’s operating environment better.
A key recommendation is the improved integration of flexible and price-responsive resources. This includes battery storage, aggregated demand response, virtual power plants, and distributed energy technologies such as rooftop solar and home energy systems. Greater visibility and participation of these resources in dispatch are positioned as essential steps toward building a more dynamic and reliable grid.
To address the gap between short-term market signals and long-term investment needs, the Review proposes a new Electricity Services Entry Mechanism.
This process would support the competitive procurement of standardised contracts for firming, shaping, and bulk energy services. Contracts would be awarded through reverse auctions, helping to create investment certainty without undermining existing market structures. This approach is designed to reduce reliance on short-term interventions and provide a more stable pathway for private investment.
The Review also places significant focus on improving the contract market. With greater price volatility and growing interest in financial risk management, improving transparency and liquidity is critical. The Review suggests actions such as enhanced disclosure of contract terms and potential obligations for large participants to support market depth. These improvements aim to strengthen the ability of all market participants—retailers, generators, and large energy users—to manage their positions effectively.
Overall, the Review sets a clear direction. It does not seek to replace the NEM’s foundations but rather to refine and strengthen them. The proposed reforms are practical, proportionate, and aligned with the long-term interests of the market.
As consultation continues, Edge2020 will engage with clients and stakeholders to interpret the implications and ensure readiness for what lies ahead. We welcome the Review’s direction and believe its implementation can help reinforce market confidence, improve investment outcomes, and support the energy transition already underway.