The Australian Energy Market Operator (AEMO) has released its 2022 Electricity Statement of Opportunities (ESOO) report, predicting future instability in “most areas” of the National Energy Market (NEM).
The report cites a predicted 8.3GW reduction to the National Energy Market in the coming decade – representing about 14 per cent of total network capacity – with at least five coal power plants nearing the end of their operational life.
Considering only existing and committed projects, AEMO’s report forecasts reliability gaps against the Interim Reliability Measure in South Australia in 2023-24 and Victoria from 2024-25.
New South Wales is forecast to breach the reliability standard from 2025-26, followed by Victoria (2028-29), Queensland (2029-30) and South Australia (2031-32).
The report models the latest market data to identify combinations of circumstances when electricity supply won’t be sufficient to meet demand, helping inform the planning and decision-making of market participants, investors and governments.
AEMO Chief Executive Officer (CEO), Daniel Westerman, said the report findings demonstrated an “urgent need” for further investment in network infrastructure.
“The report reiterates the urgent need to progress generation, storage and transmission developments to maintain a secure, reliable and affordable supply of electricity to homes and businesses,” Mr Westerman said.
“Forecast reliability gaps have emerged across NEM regions due to considerable coal and gas plant closures, along with insufficient new generation capacity commitments needed to offset higher electricity use.
“In the next decade, Australia will experience our first cluster of coal-generation retirements, at least five power stations totalling 8.3GW, equal to approximately fourteen per cent of the NEM’s total capacity.
“Without further investments, this will reduce generation supply and challenge the transmission network’s capability to meet reliability standards and power system security needs.
“The five transmission projects identified in the 2022 Integrated System Plan – HumeLink, VNI West, Marinus Link, Sydney Ring and New England REZ Transmission Link – should progress as urgently as possible to enable electricity consumers to make shared use of existing and future generation and storage.”
AEMO praised recent amendments to the National Electricity Objective agreed to by Energy Ministers, suggesting the actions would “greatly assist” in improving the investment requirements of the NEM.
Energy Networks Australia CEO, Andrew Dillon, said, “The transition to a net zero energy grid is happening. Solar and windfarms are coming online at pace. However, transmission projects are vital to ensuring that renewable energy gets from where it is generated to where it is needed – into homes and businesses.
“Today’s ESOO highlights the critical role new transmission projects such as Project Energy Connect, Humelink, Marinus Link and VNI West will play. Not only do they allow new renewable generation to connect to the NEM, they improve reliability outcomes.”
Mr Dillon said while networks are willing to invest and implement crucial transmission projects, governments, both state and federal, need to work with networks and market bodies to ensure a supportive regulatory regime.
“Having the correct policy settings means networks can better address social licence issues and community benefit concerns, while still able to recover their costs,” Mr Dillon said.
“AEMO’s Integrated System Plan confirms every dollar of transmission investment returns more than twice the benefit to customers. Regulatory, financing and social licence issues can cause costly delays, which prevent cheaper, cleaner power from flowing freely onto the grid.”
