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In it’s recently released 2020 Electricity Statement of Opportunities (ESOO) Update, the Australian Energy Market Operator (AEMO) has outlined Yallourn Power Station’s confirmed exit and additional projects not included in the 2020 ESOO.

The ESOO Update focuses on implications for the supply demand balance over the two-year period 2028-29 to 2029-30 for Victoria and South Australia, as these are the only two regions materially impacted by the confirmed closure of Yallourn Power Station.

AEMO Chief System Design Officer, Dr Alex Wonhas, said that generation changes subsequent to the 2020 ESOO mirror the dynamic nature of Australia’s transforming energy sector.

“Our aging coal-fired power stations are rapidly nearing the end of their technical and economic life, while investment in renewable, battery storage and residential solar continues to increase at an unprecedented rate,” Dr Wonhas said.

“Certainty around Yallourn’s exit is welcome as it gives the market ample opportunity to prepare for a smooth transition without loss of reliability or excessive price impacts on consumers.

“The modelling of the Yallourn exit and new connections since the 2020 ESOO result in an increase in forecast unserved energy (USE) for Victoria and South Australia. 

“As a result, the Interim Reliability Measure (IRM) will be exceeded in both states in 2028-29 and 2029-30, unless there is further commitment of dispatchable capacity.”

With the right market settings, more dispatchable capacity is expected to be built and address these reliability concerns. Pleasingly, additional projects have already been announced. Whilst they are not yet qualifying under its commitment criteria, AEMO said they are very likely to proceed and will materially improve the forecast reliability outlook.

These include the 350MW battery EnergyAustralia announced it would complete in 2026 and the 300MW Tallawarra B peaking power plant the company has announced in the Illawarra in New South Wales.

Investment in new generation continues at significant speed. In 2020, more than 40 projects totaling nearly 4,900MW completed registration or began exporting to the grid. A further 300 generation and storage projects totaling 55,000MW are proposed across the National Electricity Market (NEM).

“These new generation sources will help transition our electricity market as two out of three of today’s coal-fired generators are due to retire by 2040,” Dr Wonhas said.

AEMO will issue the 2021 Electricity Statement of Opportunities report in August 2021.

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