Link to my LinkedIn post, reprinted below: https://www.linkedin.com/feed/update/urn:li:activity:7399662980629590017/ 

Yesterday’s post by Modo Energy, reporting that some batteries paid $14,000/MWh to charge up, gets to the heart of why I object to recommendation 1C of the NEM’s Wholesale Settings Review “Do not implement locational marginal pricing or variants considered previously.”

The regional pricing characteristic of the NEM’s current market design does not incentivise the most efficient operations of battery assets. It does not incentivise the most efficient siting of batteries from a whole-of-system perspective. Yet if the NEM is going to facilitate significantly greater levels of renewable penetration in the most cost-effective way, we’re going to need allow these batteries to capture the congestion-relieving (and loss-relieving) benefits they provide to the network. We certainly do not want to penalise them for providing system-wide benefits, which is what sounds like what happened.  

In my paper with Farhad Billimoria, we mention in some case studies just a few of the inefficient incentives and outcomes that stem from the misalignment of the market model for electricity in the NEM with the physical realities of the network. I expect the economic costs of persisting with such misalignments should only grow as the transition deepens – the root causes of what might be considered as “quirks” today will be substantive impediments to the efficient operation of the grid tomorrow, if they are not already. So following recommendation 1C will ensure that we won’t be making best use of our future grid and our future grid-connected assets.

Post by Modo Energy: https://www.linkedin.com/posts/modo-energy-apac_constraints-in-new-south-wales-last-week-activity-7399182613665665024-Hu6i?utm_source=share&utm_medium=member_desktop&rcm=ACoAABEWSyIBXj3mDSwMoAFhfCPTTLb6uY13sn8

Link to my response to the NEM Review (with colleagues at the Monash Energy Institute): https://www.monash.edu/__data/assets/pdf_file/0008/4135139/Nelson-review_Monash-Energy-Institute_Response.pdf

Link to my paper with Farhad: https://drive.google.com/file/d/1fhTC_GAX9iNQMYOzdW9b3ejq0N9rf2BY/view?usp=sharing  

A 25 minute video at an unflattering angle with a draft lesson for my 2026 students (poor quality, but may be easier than reading a paper!): https://photos.google.com/share/AF1QipOK4kE085CiNclFhILqy_5NeyYxN2x3g9J70xSdq_Irh6kP0RlIDRX94kn0B4ateA?key=ZkxLckpSb3A5djlFLS01LUg5Q2M4NzRBS3lZbjN3