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Project overview
  • Lead Organisation

    Monash University


    Clayton, Victoria

    ARENA Program

    Advancing Renewables Program

  • Start date

    2 March 2022

    End date

    1 February 2024

  • Project Partners
    Australian Energy Market Commission (AEMC), Power Systems Consultants Australia (PSC)


The Monash University Integrating Energy Storage into the NEM Study will investigate Australian electricity markets with an aim to design efficient incentives for energy storage investors and operators.


The Monash University Integrating Energy Storage into the NEM Study assumes energy storage is critical to the uptake of renewable energy. Monash University hypothesises that current market rules are hindering investment in energy storage.

The project scope aligns with the findings of the Energy Security Board (ESB) Post 2025 Electricity Market Design final report, which recommended work on a longer term need for ‘day-ahead markets’ and development of an inertia spot market.

Day-ahead markets are financial markets where market participants buy and sell electricity at binding prices for the following day. This can help generators hedge against pricing and scheduling risks, better meet forecast demand, reduce uncertainty in real-time market prices and provide clear price signals to demand side management providers.

The Australian Energy Market Commission (AEMC) is exploring options for the forward commitment of energy, inertia and system strength through the “Capacity commitment mechanism for system security and reliability services” rule change process.


The project comprises four areas of study:

  1. Market rules for storage – Seeks to determine the most appropriate clearing and settlement rules when storage is a key segment of the market. This will include investigation of day-ahead markets and the various design parameters including clearing and settlement rules.
  2. Dispatching a market with storage – Seeks to design a new dispatch algorithm to reflect the updated market clearing rule and settlement rule.
  3. New services with storage (ancillary markets) – Seeks to value inertia and design a new market for this product, while balancing incentives with the energy market. Tasks to value this market will include mapping inertia (and synthetic inertia) into a tradable unit and constructing a demand function for synthetic inertia.
  4. Industrial organisation with storage (competition issues) – Seeks to better understand market power issues related to storage operators to inform competition authorities.

Findings will be distributed via publicly accessible reports, webinars and conferences targeting industry participants and academics.


If successful, this project will help outline market design solutions that could improve the valuation of, and by extension investment in, energy storage services which will improve grid reliability and renewable energy uptake. The findings from this project will assist the AEMC and other market bodies implement reforms to electricity markets and markets (or other frameworks) for essential system service provision.

Last updated 10 August 2022
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