Is Australia’s energy market operator still up to the task? That’s the burning question at the heart of a major review just launched by Federal Labor. Nearly 17 years after the Australian Energy Market Operator (AEMO) was established to manage the nation’s electricity and gas markets, its governance is under the microscope. But here’s where it gets controversial: as Australia races toward an ambitious 82% renewable energy target by 2030 and net zero by 2050, can AEMO’s current structure keep pace with this seismic shift?
Federal Energy Minister Chris Bowen announced the review on Friday, following its approval at the December meeting of the Energy and Climate Change Ministerial Council (ECCM). Led by governance expert Nigel Ray, the review aims to ensure AEMO remains “fit for purpose” in an era of rapid energy transformation.
AEMO, founded in 2009, was initially tasked with managing the day-to-day operations of the power system, wholesale electricity markets, retail energy markets, gas markets, and transmission development. Since 2018, its responsibilities have expanded to include publishing the Integrated System Plan (ISP), a 20-year roadmap for the National Electricity Market (NEM) to balance affordability, reliability, and the transition to net zero. The ISP itself underwent a review in 2024, highlighting its growing importance.
But this is the part most people miss: AEMO’s role has ballooned further to encompass grid system strength, reliability, reserve trading, gas market security, advisory services, and support for jurisdictional energy investment schemes. With such a broad mandate, questions arise about whether its governance structure can effectively manage these complexities.
AEMO has long championed renewables and storage as the lowest-cost, most reliable replacements for aging coal-fired power stations. Yet, its modeling and planning were largely sidelined by the former Coalition government, which has since criticized AEMO while pushing for nuclear and baseload power. In contrast, Labor has embraced AEMO’s blueprint, using it as the foundation for its renewable energy and climate targets.
In a LinkedIn statement, Minister Bowen praised AEMO as “a world-class institution” but emphasized the need to review its governance model. “Australia’s energy ministers have agreed to ensure AEMO’s governance remains fit-for-purpose, especially in light of ongoing reviews like the NEM Review and Gas Market Review,” he said.
AEMO welcomed the review, stating its role continues to evolve to support the energy transition in the interest of consumers. “We’re eager to assess whether our governance arrangements are fit for the next phase of this transition,” a spokesperson added.
The review will scrutinize AEMO’s transparency, accountability, and operational efficiency. It will also evaluate whether changes to its corporate legal structure, membership, and even its governing legislative framework—potentially under the South Australian Parliament—are necessary. Currently, AEMO’s membership is split 60% government and 40% industry, with a workforce of 1,800 professionals across Australia.
Other areas under the microscope include AEMO’s budget, potential conflicts of interest, board appointment processes, and how it responds to directives from energy ministers. Nigel Ray will present his findings to Energy Ministers in 2026, following consultations with stakeholders including governments, regulators, industry participants, unions, and consumer representatives.
But here’s the real question: As AEMO navigates an increasingly complex and politically charged energy landscape, can its governance structure adapt to meet the demands of a renewable-dominated future? And should it? We’d love to hear your thoughts—do you think AEMO is still fit for purpose, or is a radical overhaul needed? Let us know in the comments below.
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