WA's Electricity Market Explained: The WEM Past, Present and Future | Shane Cremin

Energy Off Script returns with the Western Australian Wholesale Electricity Market, the WEM, the purpose built market that supplies the South West Interconnected System. Host Steve Lewis of Brightsource Consulting sits down with Shane Cremin, an electrical engineer and 20 year veteran of the WA electricity sector, with experience across economic regulation, asset development, financing, and operations and commercial strategy. Together they trace the WEM from the days of the State Energy Commission and coal, diesel and gas, through the privatisation wave to the market launched in 2006. Shane also shares candid views on why the WEM has performed so well, why free wind and sun do not automatically mean cheaper bills, the risk of a fixed 2030 coal exit, and where nuclear and data centres fit in. Key Takeaways • The WEM launched in 2006, nearly 10 years after the east coast market, as a bespoke design for an isolated grid: an energy market plus a capacity market. • Most energy is traded under bilateral contracts. Real time trading makes up only around 10% of the energy consumed, which keeps price volatility down on a small grid. • The capacity mechanism is built around the marginal generator, usually an open cycle diesel unit needed about once every 10 years in a very hot summer. A coal generator gets only 20 to 30% of its costs from capacity credits. • Shane gives the WEM a tick on reliability, emissions relative to the NEM, economic outcomes and demand forecasting. In real terms, delivered electricity costs were stable or falling from 2006 until the last couple of years. • "The rate of change is so fast now that we are losing control of managing all of those things that we gave ticks to before." Wind, rooftop solar, batteries and coal closures have driven a sharp rise in the cost of supply. • Free wind and sun do not mean cheaper bills. Real time energy is a small part of the tariff, while networks, capacity, inertia and system strength add up. • Renewable build costs rose sharply after COVID, the war in Ukraine and higher interest rates, so the Capacity Investment Scheme has not had the impact intended. • Shane argues the objective is decarbonisation, not simply getting out of coal, and a fixed 2030 date risks locking in wind at its highest cost in 20 years. Nuclear does not suit a small isolated grid today, but should not be discarded in the long term. Timecodes: 00:00 Episode highlights 00:41 Welcome and meet Shane Cremin 04:26 WA's isolated grid before the WEM 07:20 From SECWA to the 2006 market 10:08 Why households still buy from Synergy 14:16 Energy only versus capacity market 16:46 Capacity credits and the marginal generator 20:54 The WEM report card 25:03 Government ownership and central control 30:20 Renewable targets and the Capacity Investment Scheme 34:55 Why free wind and sun do not mean cheaper bills 41:27 Existing assets versus rebuilding 43:54 The 2030 coal exit 47:15 Is there a role for nuclear? 48:17 Data centres, solar and closing thoughts Connect with Steve🌐 LinkedIn 🔗   / steve-lewis-b8.  . Website 🔗 https://brightsourceconsulting.com.au/ Email 🔗 admin@brightsourceconsulting.com.au Disclaimer: The views expressed are those of the host and guest and do not necessarily reflect those of any current or former employer. This episode is general information only and is not financial, investment, legal or professional advice. Please seek independent advice. #EnergyOffScript #WEM #WAEnergy #ElectricityMarket #CapacityMarket #EnergyTransition #Renewables #NetZero #WesternAustralia #Brightsource