Critical investment needed to manage reliability gaps

2 min

AEMO has issued its 2022 Electricity Statement of Opportunities (ESOO) report, forecasting electricity reliability concerns that require an urgent response in most regions of the National Electricity Market (NEM) in the next 10 years.

The ESOO 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 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 committed1 projects, AEMO forecasts reliability gaps against the Interim Reliability Measure2 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.

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.

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.



Click here to enlarge the ESOO Summary. 

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