Post: “Urgent investment” required, says AEMO

“Urgent investment” required, says AEMO

Much of the national power grid will face reliability problems over the next decade without rapid investment in both electricity generation and transmission.

The Australian Energy Market Operator (AEMO) has published its 2023 Electricity Statement of Opportunities (ESOO) report, which provides a 10-year reliability outlook for each state within the National Electricity Market (NEM).

In the next ten years, electricity consumption and peak demand are anticipated to rise and AEMO identified a number of reliability gaps, primarily attributed to the expected retirement of 62% of the current coal fleet by 2033. To safeguard the reliability of electricity supplies, it is imperative that planned investments in transmission, generation, and storage projects are expedited.

Based on the ESOO’s ‘central scenario,’ which considers existing, committed, and anticipated projects, there are predictions of reliability risks exceeding established standards. These risks are expected in Victoria from this summer, in New South Wales starting in 2025-26, in South Australia during this summer and again from 2028-29, and in Queensland from 2029-30.

Identified reliability gaps within the ‘central scenario’ are a crucial aspect of the electricity planning process, as they signal the need, and in some instances, the obligation for electricity retailers to secure adequate capacity to maintain a reliable power system.

Compared to the previous summer, there is an expectation of approximately 3.4GW of new generation and storage capacity becoming available this summer. This is particularly important because this summer is predicted to be hotter than in recent years, potentially leading to higher electricity demand.

Government initiatives at both federal and state levels, including transmission projects identified in the Integrated System Plan and mechanisms for ensuring capacity, like the Commonwealth’s Capacity Investment Scheme, have the potential to mitigate many of the identified risks over the majority of the ten-year timeframe if they are executed according to schedule. AEMO notes that there is 173GW of new renewable energy projects, and 74GW of dispatchable power, which could ease reliability problems if they are built in a relatively short time frame. Two of the largest are the Snowy 2.0 and Borumba pumped hydro projects, both expected to be complete near the end of the decade.

AEMO CEO Daniel Westerman said this year’s report underscores the rapid pace of Australia’s energy transition and the pressing need for prompt investments to ensure that consumers have access to dependable, cost-effective, and cleaner energy. He emphasized that while the central scenario indicates increased reliability risks, it does not account for the reliability potential stemming from the 248GW of proposed generation and storage projects, actionable transmission projects, and government energy initiatives currently in progress.