The growth in renewable power generation has pushed down power bills, but a new report warns of higher prices if the coal plant switch-off is not properly managed.
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The Energy Security Board on Tuesday released a major report into the health of the national electricity market.
It said without a smooth transition from Australia's reliance on coal-fired power to renewables, power prices could be pushed higher.
"Properly considered investments in generation and networks should improve overall affordability, but inappropriate investment will not," the report said.
The shift to wind and solar also needs careful management to ensure the electricity system can consistently meet required settings in terms of frequency and voltage.
Wind and solar are non-synchronous and do not have the same technical characteristics as thermal and hydro power generation.
As well, Australia needed to consider how to balance cutting emissions and ensuring reliable electricity.
By the end of 2020, emissions in the national electricity market will be 25 per cent below 2005 levels and by 2030 this reduction is expected to be well over 50 per cent, the report said.
There have been concerns about the closure of NSW's Liddell plant in 2023-24 putting reliability at risk, but the report notes the upgrade to the Queensland-NSW transmission interconnector is progressing well and local new renewable generation of around 900MW is under way.
Minister for Energy and Emissions Reduction Angus Taylor said the post-2025 work was important in keeping the lights on and costs down.
"The national electricity market is at a turning point, with expanding choices, new technologies and large-scale replacement of thermal generation needed as older power stations leave the market," Mr Taylor said.
"Taking action now is critical and will minimise disruptions, and avoid unintended consequences."
ESB chair Dr Kerry Schott said there were repercussions from rapid changes in the electricity system, such as the massive popularity of rooftop solar.
"We're moving in the right direction, but major changes are needed to unlock value to customers and ensure capital investments are made in an efficient and timely manner to deliver the affordable, reliable and secure electricity consumers need," she said.
Australian Associated Press
