The Australian Energy Market Operator’s (AEMO) 2022 NEM Electricity Statement of Opportunities (ESOO) has highlighted the urgent need for new transmission to help overcome forecast electricity supply gaps over the next 10 years.
Reliability issues as a result of coal-generation retirement could mean energy shortfalls resulting in blackouts across the National Energy Market (NEM).
AEMO CEO Daniel Westerman said 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.
“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 8.3 gigawatts (GW), equal to approximately 14 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,” he said.
Considering only existing and committed projects, AEMO 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).
“Despite the challenging reliability outlook against ‘committed’ projects, should the 3.4 GW of anticipated generation and storage projects, alongside ISP actionable transmission projects, be delivered to their current schedules, then reliability standards would be met in all regions of the NEM until later in the decade when more large thermal generators exit,” Mr Westerman said.
“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.
“Governments also have a range of measures to bring in new generation, storage and transmission, which will greatly aid the short- to medium-term outlook. As these become committed, they will be incorporated into future reliability assessments, and will reduce the reliability risks presently forecast,” he said.
Energy Networks Australia CEO Andrew Dillon said part of the answer lay in fast tracking transmission projects across the east coast.
“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,” he said.
Mr Dillon said while networks were willing to invest and implement crucial transmission projects, governments, both state and federal, needed 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.
“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.”
Structural reforms to the NEM and amendments to the National Electricity Objective agreed by Energy Ministers recently will greatly assist in improving the investment environment and enable the transformation of the NEM.
