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Australia's National Electricity Market: Optimising Policy to Facilitate Demand-Side Response

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  • Tim Nelson
  • Fiona Orton

Abstract

type="main" xml:lang="en"> In this article, we outline the recent reductions in electricity sector capital productivity and higher end use prices. Unsurprisingly, policy-makers are now examining ways to encourage greater levels of consumer participation to improve capacity utilisation and outcomes for consumers. We find that consumers are likely to be better off by responding to retail, rather than wholesale generation, pricing. Retail prices reflect potential savings across all supply chain costs including the primary driver of recent price increases, capital-intensive networks. Conversely, the wholesale electricity generation market is currently heavily oversupplied and savings for consumers are likely to be scarce.

Suggested Citation

  • Tim Nelson & Fiona Orton, 2016. "Australia's National Electricity Market: Optimising Policy to Facilitate Demand-Side Response," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 49(2), pages 146-168, February.
  • Handle: RePEc:bla:ausecr:v:49:y:2016:i:2:p:146-168
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    Cited by:

    1. Paul Simshauser, 2021. "Lessons from Australia's National Electricity Market 1998-2018: strengths and weaknesses of the reform experience," Chapters, in: Jean-Michel Glachant & Paul L. Joskow & Michael G. Pollitt (ed.), Handbook on Electricity Markets, chapter 9, pages 242-286, Edward Elgar Publishing.
    2. Simshauser, Paul, 2018. "On intermittent renewable generation & the stability of Australia's National Electricity Market," Energy Economics, Elsevier, vol. 72(C), pages 1-19.
    3. Lorraine Conway & David Prentice, 2020. "How Much do Households Respond to Electricity Prices? Evidence from Australia and Abroad," Economic Papers, The Economic Society of Australia, vol. 39(3), pages 290-311, September.
    4. Simshauser, Paul & Whish-Wilson, Patrick, 2017. "Price discrimination in Australia's retail electricity markets: An analysis of Victoria & Southeast Queensland," Energy Economics, Elsevier, vol. 62(C), pages 92-103.

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