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What benefits can be derived from the WESM?
The establishment of the WESM will facilitate a transparent and competitive electricity market for the country. It will serve as an efficient venue for the trading of electricity to ensure that generation is balanced with the ever-changing demand for electricity.
The WESM is designed to encourage competition in generation while at the same time providing incentives for the effective operation and development of the transmission networks, coupled with locational price signals to encourage the economically correct geographic placement of any future planned generation.
With competition as the key driving factor, efficiency gains are expected to arise in the short and long term. In the short-term, efficiency gains will result from pressures on electricity businesses to reduce costs, align prices and tariffs with costs, and use of assets more efficiently. In the longer term, as new competitors emerge in wholesale power generation, the efficiency gains are likely to be more substantial.
The spot market provides economic price signals to generators, customers, and network service providers to assist them in their alternative investment options for new generation capacities, demand side management (e.g. consumption curtailment in response to high prices), and network expansions. These price signals are also important, in terms of the signals they provide to competing energy sources.
Ultimately, the WESM aims to end the inherently inefficient monopoly system for generating and selling electricity by providing consumers with the "choice of power" and the "power of choice".
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