
Headwinds for the NEM transition: an alternative scenario for Australia’s NEM
9 February 2025
Baringa’s analysis suggests that nuclear will be challenging to deploy in Australia, with delivery likely to take at least 20 years. Headwinds for the NEM transition: An alternative scenario for Australia’s National Electricity Market (NEM) explores potential challenges facing the NEM’s transition, including slower transmission rollout leading to slower renewables investment, reduced support for renewables and hydrogen development, and extended coal lifetimes to cover the gap until nuclear comes online.
The analysis, which examines the potential shift in federal policy towards the introduction of nuclear power generation in the NEM, suggests that although nuclear energy is expensive, incorporating five reactors would not destabilise the system. However, given the long lead times, substantial development of wind and solar energy would still be essential to meet demand and replace retiring coal assets.
The research also offers the following insights:
- International experience indicates that nuclear power would require at least 20 years to become operational in Australia, given there is limited domestic nuclear industry and skills at present. Even with extensions to coal power plants, substantial investments in renewable energy would still be necessary to meet the growing electricity demand during this period.
- The scenario indicates that while nuclear power could be seamlessly integrated into the NEM, it would account for less than 10% of electricity consumption by the time it becomes operational.
Read the report to find out more |
Baringa’s Headwinds Scenario research was conducted in our capacity as an independent markets and investment advisor within the National Electricity Market (NEM). Its purpose was to provide potentially useful information to existing subscribers of the quarterly Baringa Australia NEM Wholesale Market Electricity report. Our subscriber base includes a diverse range of market participants from across the Australian energy and banking sectors. The scenario was not commissioned by any particular client, and Baringa itself has no policy objectives in producing it.
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