The new electricity market has been designed to boost renewable energy generation by removing impediments in the current market structure without distorting the effective and fair operation of the market.

Elements of the new market that will benefit renewable providers include:

• Renewable generators will have an increased range of options for selling electricity, including bilateral contracts, through the residual trading market and the balancing market.
• The restructure of Western Power will provide increased opportunities for private sector renewable generators, as the new Retail Corporation will be able to source renewable energy requirements freely on a competitive basis. State Generation renewable energy projects will have to stand on their merits alongside private sector projects.
• The balancing market will facilitate the often significant balancing requirements of renewable energy generators by providing balancing services on a competitive market basis and without penalties if there are deviations from schedules. Renewable generators such as wind farms will be able to simply “spill” energy into the balancing market at balancing market prices without the need for contracts or schedules if desired. This will allow uncontrolled generators to always sell available generation, whether contracted or not.
• Small renewable generators will be helped by providing fair access charges and allowing for self-dispatch (increasing or decreasing electricity output independent of system management).
• Retailers serving small customers will be required to maintain the current net billing arrangements for small renewable generators. Net billing allows renewable energy generation to simply offset consumption over a billing period, with any surplus bought by the retailer at the prevailing tariff.
• Renewable energy will be the only type of electricity able to be sold at rates above the uniform tariff cap. This will allow renewable energy to be sold at a price premium to those customers who choose to buy environmentally friendly power.
• System planning requirements will require that distributed generation options, including renewable energy, must be considered when making decisions about network upgrades.
• Opportunities for demand management will be provided within the market. Demand management will be able to compete as an alternative to generation in the Residual Trading Market and the balancing market and will be able to be used by retailers to reduce capacity requirements. Demand management options will also be required to be considered when upgrading networks.

As part of its commitment to increase the use of renewable electricity generation in Western Australia , the Office of Energy commissioned an independent study entitled “Maximising the penetration of intermittent generation in the South West Interconnected System”.

The study aims to identify and discuss actions and strategies that may be taken by Government, network operators or industry to overcome limits to the installation of renewable generation on the South West Interconnected Network.