Western Australia's Wholesale Electricity Market (WEM) has ushered in significant changes to bolster the state's energy transformation.

Effective from October 1, 2023, WA is carrying out its Energy Transformation Strategy (ETS), developed through collaboration between the Australian Energy Market Operator (AEMO), government agencies, industry stakeholders, and market participants.

The WEM serves as the platform for electricity trading within the South West Interconnected System (SWIS), the primary power system supplying approximately 1.2 million residential and business customers through an extensive network of transmission and distribution lines spanning 7,500 km and 93,350 km, respectively.

Kate Ryan, AEMO's Executive General Manager for WA and Strategy, says that the prior market structure was no longer suitable for steering the state toward its net-zero emissions target. 

She pointed to the dramatic shift from coal and gas to wind and solar sources, now comprising about one-third of the annual electricity supply, with peaks reaching 84 per cent at times.

“These reforms modernise the power system in Western Australia and lay the foundations for it to run on growing levels of renewables, while delivering secure, reliable and affordable energy to consumers,” she said.

The reformed WEM is set to foster a more competitive environment by aligning real-time electricity demand with the most cost-effective generation sources while upholding power system security and reliability.

AEMO's WEM Reform program involved extensive work to develop new capabilities, processes, and systems, along with preparing AEMO and market participants for the updated market structure.

“AEMO’s significant reform package to the WEM lays the groundwork for an orderly transition to cleaner, more affordable and reliable electricity in the SWIS,” Ms Ryan said.

This transformation promises several benefits, including encouraging and facilitating future investments to uphold system security and reliability during the energy transition.

It is also intended to establish a modernised grid capable of accommodating substantial renewable energy capacity and emerging technologies, such as grid-scale battery storage.

Advocates say it will help resolve technical issues that led to dispatching higher-cost generation, thus enabling greater integration of low-cost renewable energy into the grid.