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The 2023 update to the Electricity Statement of Opportunities (ESOO) report released by the Australian Energy Market Operator (AEMO) highlights the urgent need for investment in generation, long-duration storage, and transmission to achieve reliability requirements over the next decade. 

The reliability update is due to material generation capacity changes since the 2022 ESOO, with insights used from developer and market participant surveys, along with AEMO’s Generation Information and Transmission Augmentation Information files.

AEMO CEO, Daniel Westerman, said that the update reiterates the critical need for timely investment in generation, long duration storage and transmission to fill forecast reliability gaps as Australia moves rapidly away from its traditional dependency on coal generation.

“Since publishing the 2022 ESOO, short-term forecast reliability gaps in South Australia (2023-24) and Victoria (2024-25) have been filled by new gas, wind and battery developments, along with a delay to the retirement of an existing gas generator,” Mr Westerman said.

“Reliability gaps begin to emerge against the Interim Reliability Measure from 2025 onwards. These gaps widen until all mainland states in the NEM are forecast to breach the reliability standard from 2027 onwards, with at least five coal power stations totalling approximately 13 per cent of the NEM’s total capacity expected to retire.

“Urgent and ongoing investment in renewable energy, long-duration storage and transmission is needed to reliably meet demand from Australian homes and businesses.”

Since the 2022 ESOO, released August 2022, 1,326MW of wind and 461MW/604MWh of battery storage projects across the NEM have met AEMO’s commitment criteria. 

Strengthening near-term reliability forecasts is the delayed closure of the Osborne Power Station in South Australia, the newly committed Bolivar Power Station in South Australia, and Waratah Super Battery in New South Wales with associated transmission upgrades and system integrity and protection scheme (SIPS).

The SIPS provides a virtual transmission solution that unlocks capacity in the existing transmission system, allowing electricity consumers in the Sydney, Newcastle and Wollongong demand centres to access more energy from existing generators. 

“The NEM has a strong pipeline of proposed generation and storage projects, totalling three times today’s generation capacity, with large-scale solar, wind and batteries accounting for 86 per cent,” Mr Westerman said.

“Investment in firming generation, such as pumped hydro, gas and long-duration batteries, is critical to complement our growing fleet of weather-dependent renewable generation to meet electricity demand without coal generation.”

The update also highlights the risk of events when electricity demand may exceed supply. These events may be driven by weather uncertainty or other circumstances, such as generator or transmission outages that may erode available supply when it is required. 

AEMO will continue to work with governments, market bodies, industry and community to manage risks and potential solutions as the power system transitions from coal to firmed renewables, supported by efficient investment in the transmission system.

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