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Untangling the NEM: A policymaker's guide to the National Electricity Market

June 14, 2022

With the rise in electricity prices, the National Electricity Market is at the front and centre of our political discourse. It is now more important than ever that our leaders understand how the NEM works.

Conjecture abounds on what happens when the wind doesn’t blow and the sun doesn’t shine, but these statements are not always consistent with the technical or economic realities of the NEM. It is a complex beast. Understanding the features of our electricity system is a prerequisite to making a reasoned contribution to energy policy.

Policymakers need to raise the level of public debate beyond baseless claims and counterclaims. Whether looking to defend or attack given policies, informed debates between decision makers are only possible when they know what they’re talking about.

This report acts as an accessible, comprehensive first port-of-call for policymakers and key stakeholders to ensure they have the facts straight when talking about, and making decisions that affect our NEM. It is designed to equip policymakers and commentators with an accessible knowledge base from which to devise or advocate for critical reform. Two critical aspects of the electricity market are outlined: the NEM's physical constraints and makeup, and the markets that govern it.

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