The new frontier for Australia’s energy transition
Executive General Manager System Design Nicola Falcon, CIGRE 2 September 2025
Thank you, Peter, for that warm welcome.
I would like to begin by acknowledging the Kaurna people, the traditional custodians of this land on which we meet today.
I pay my respects to the Elders both past and present, and to all First Nations people with us today.
And I’m absolutely delighted to be here at the CIGRE Australia ‘Shaping the power system of tomorrow’ conference, talking about the new frontier for Australia’s power systems.
Before we begin, I’d like to briefly introduce the Australian Energy Market Operator.
AEMO is an independent, not-for-profit system and market operator. We operate across Australia’s west and east coasts in the interest of consumers.
From our control rooms, our people operate Australia’s wholesale energy systems and markets 24/7, helping keep the lights on and the gas flowing to households and businesses.
As a trusted adviser to governments and industry, we help plan Australia’s technical and complex energy transition and partner with governments to support new investment in infrastructure to meet future energy needs.
We perform four key roles, as prescribed in national and state energy laws, rules and regulations:
- We operate Australia’s main energy systems – electricity and gas.
- We operate Australia’s main energy markets.
- We play a role in planning Australia’s energy future, as the national system planner.
And more recently we’ve embraced a fourth roles supporting new investment where AEMO acts as a key delivery partner for federal and state government energy investment schemes, helping bring forward the infrastructure and technologies needed for Australia’s energy transition.
This role reflects a global trend, where system and market operators are increasingly being called upon to actively enable the energy transition.
Let’s start with a focus on Australia’s energy transition.
Every day, more than 14 million homes and businesses across Australia depend on a reliable and affordable supply of energy.
Today, Australia is in the middle of a historic transition of both how we produce and how we consume energy.
Australia’s energy sector is shifting from a historic paradigm of “baseload and peaking” generation, where coal-fired generation ran at high utilisation rates and was supplemented by peaking gas … to a new paradigm of “renewables and firming”, where variable renewable energy is then “firmed up” with storage, and flexible gas serves as the ultimate backstop.
Since 2012, 10 major coal plants have retired…while plant owners have notified AEMO that a further five could close in the coming decade.
At the same time, grid-scale renewables and storage have grown to half of the National Electricity Market’s (NEM’s) capacity, with a further 53 gigawatts of new generation and storage capacity working through the connection process today – equal to 77% of today’s total capacity.Australia is leading the world in the uptake of inverter-based generation, dominated by solar panels.
Today there are more than 4 million solar systems on roofs across the country. And that growth, of nearly four hundred thousand systems a year, shows absolutely no sign of abating.
Consumers are taking control of their own energy destiny – contributing to emissions reductions and managing their own energy costs.
And the expected transition to 2050 is profound.
Electricity consumption is forecast to double by 2050, and we will be operating a power system without coal.
The lowest cost way to replace this generation is by harnessing Australia’s abundant sunshine and wind to generate electricity … to store that energy in batteries and dams to smooth out the peaks and troughs of that variable renewable energy … and to ensure that sufficient flexible gas generation exists as the ultimate backstop for longer dark and still periods.
The implications of this seismic shift, from big industrial-scale spinning machines to household investments that are spread across cities, suburbs, and towns, has a heavy focus in the work being done by AEMO’s engineers, data scientists, economists, and digital professionals around the country.
At the end of the day, we need to ensure that the future power system is operable, so let’s briefly pause and reflect on what it’s like operating Australia’s power systems today.
In AEMO’s control rooms, we oversee Australia’s two largest energy grids every minute of every day, and we see Australia’s transition playing out in real time.
Monday last week in Perth, Western Australia, was the coldest day in more than 50 years, well below the weather forecasts.
Picture a day with hail and rain interspersed with periods of blue sky. There was more than one impressive rainbow when I looked out of my office window, over the Swan River.
Meanwhile, in our control room operating Western Australia’s main power system, the South West Interconnected System, the day was starting to get pretty interesting.
Due to the intermittency of sunshine, the output from solar rooftop PV (which is currently installed on more than a third of homes in WA) was highly variable. We saw a record change in electricity from the grid, with demand dropping 35% from 3,200 megawatts to 2,100 megawatts in under 45 minutes.
This is a ramp-down exceeding 24 megawatts a minute which, in a system with maximum winter load around 4 gigawatts, is quite significant. And this was followed by a nearly similar sized upswing in demand straight afterwards, as you can see on this chart.
Batteries bidding according to automated algorithms were not fully charged leading into peak demand period, started discharging early in response to price, and ended up running flat when we needed them most. And on top of this, some thermal generators were on forced outage due to wet coal.
Gas-powered generation came to the rescue, but the demand placed on the gas pipeline exceeded the capacity of the infrastructure and we needed to constrain output. Diesel generation was dispatched.
In the end, we maintained a reliable and secure power system through what turned out to be the second-highest winter demand on record, and thankfully the security risk only reached the lowest reserve level.
However, multiple directions were issued and intervention constraints implemented to secure generation capacity for the evening peak demand and to offset the gas supply limitations.
This helps bring to light some of the challenges we are facing as system operator during the energy transition. No longer is it simply about whether we have sufficient capacity to meet peak demand.
The state of charge of batteries, flexibility of fleet to manage rapid swings in demand, the accuracy of demand and variable renewable forecasts, the visibility of distributed energy resources, and the interdependencies of gas and electricity systems are now all important considerations in this new frontier.
Now let’s turn our attention from winter to spring.
Spring is a time when we see high renewable generation contributions. In the SWIS, renewable output averages 40%, and has peaked at 85.1%, while rooftop solar has provided ~76 % of demand at times.
And it’s a similar story on the east coast in the NEM, with renewable energy providing more than 40% of total energy needs, and at times meeting as much as 75% of demand.
This is often a time when we experience “minimum system load” events, when demand for power from the grid is extremely low due to mild conditions and excess output from rooftop solar, squeezing the number of megawatts available to provide essential system security services.
With such an abundance of rooftop solar here in South Australia, AEMO is already facing periods of time where there is more power available from rooftop solar than is required to meet total demand, which is what happened in October last year, and likely to be observed again this spring. In these circumstances, AEMO may need to take action to secure the grid – such as directing generation or reconfiguring the network.
After these actions are exhausted and expected demand levels threaten the security of the power system, network businesses may need to temporarily reduce or curtail rooftop PV. These last-resort actions assist in keeping the grid secure, while enabling the continued growth of rooftop PV.
Spring is also a popular time for plant outages, but if multiple synchronous generators are out at the same time, system strength can fall. Just last week, we needed to issue directions in NSW to maintain system strength and we will continue to monitor this closely.
This view from the control room demonstrates that Australia’s energy transition is well underway and it is imperative that operational risks are taken into consideration by all stakeholders when planning future power systems and the markets and regulations that support them.
Through consultation with industry, AEMO’s 2025 General Power System Risk Review identified four priority risks in the NEM that are either current or emerging.
These were:
- Potential risks of instability or thermal overload to interconnectors and other key transmission circuits during remote frequency events. This may occur if battery energy storage systems (BESS) or other fast-acting inverter-based resources (IBR) facilities are concentrated in certain areas without appropriate settings. Existing and planned BESS facilities in the NEM are sufficiently distributed to mitigate the risk of excessive BESS frequency response in the short to medium term. However, capacity dispersion will need to be continually monitored to ensure this risk remains low.
- Minimum system load risks, as already discussed.
- The risk of unexpected operation or interaction of protection systems and control schemes.
- Concern that the number and size of potential non-credible contingencies may increase over time, testing the resilience of the power system.
New tools for managing non-credible contingency events may be required to adequately address this risk in the future.
A number of recommendations were provided in the report aimed at identifying actions that will support the secure operation of the power system into the future.
That said, AEMO recognises the complexity of the energy transition and that it is not possible to predict or control all risks in a rapidly changing energy system.
As I am sure all of you know, on 28 April, up to 50 million people across Spain and Portugal went without power for 10 hours, and some for longer.
It’s a stark reminder that a secure and reliable supply of energy is the backbone of modern society.
Power systems are complex, and detailed investigations are still ongoing, but it’s very clear that there was not just one single event or root cause.
Up to 12 simultaneous issues have been identified as contributing to the cascading trips of generation, and ultimately the complete collapse of the power system.
Their power system saw swings in voltage; reductions in reactive power; unexpected behaviour of grid-connected equipment; oscillations in system frequency, and more.
All things that we broadly put in the category of system security.
In Australia, we already have a laser-focus on keeping these technical attributes of the power system in good health – at AEMO, at network companies, and within our industry as a whole.
And while I’m sure there will be learnings from the Spanish event, AEMO’s annual assessment process already clearly identifies any system security shortfalls in the planning horizon, which then require remediation, typically by transmission networks and planners.
Our connections process in Australia also puts us in good stead, with a robust process for assessing Generator Performance Standards and commissioning tests to assure the stable and secure performance of the power system.
Our recent NEM Electricity Statement of Opportunities (ESOO) highlighted that, while a record 4.4 gigawatts of new capacity was commissioned to full output in the last financial year, up to 10.1 gigawatts needs to be commissioned per year over the next five years to meet target levels and timings in federal and state government programs.
We need to connect this capacity while maintaining a very strong focus on system security, in order to enable the next set of transition points in Australia’s energy transition.
A reliable and secure power system requires more than just sufficient levels of installed capacity and available energy supplies.
The system must also maintain an underlying set of security and stability services, and have appropriate technical standards to respond well and predictably to power system disturbances.
This is required to ensure that the system remains both secure and resilient under intact operating conditions, and following larger events that can occur on the power system during major disturbances.
In June, for the first time, we provided a system strength outlook in our WA ESOO to help identify future investment needs as coal exits and is replaced by IBR.
In December, AEMO will release a NEM system security outlook that brings together our annual system security reports and evaluates our readiness to ensure power system security as we navigate these events.
This includes planning for major transition points that we see coming, like the retirements of large synchronous generators, which create a step change reduction in the facilities available to provide critical system security services.
As Australia navigates through these transition points, new investment is needed to provide system security moving forward – ensuring we have enough energy for reliability, but also the essential services to keep the grid secure, like system strength and inertia.
Through our research, we expect this will be through a wide range of technologies and investment mechanisms, such as:
- Contracts with existing synchronous units (hydro, coal, gas).
- New synchronous condensers – large spinning machines used to provide inertia for grid stability.
- New gas turbines fitted with clutches to provide essential system security services when they are not generating electricity.
- Retrofit of coal and gas units to operate as synchronous condensers when needed.
- Grid-forming inverters – which are undergoing real-world testing and demonstration of capabilities to provide a range of system services.
While the list of technical solutions is available, it’s critical that these investments are delivered before they’re needed, as we approach these transition points.
Last, but by no means least, we want a fair and just transition, where no one is left behind, and consumers have the ability to benefit from participation in the market.
Australians continue to invest in rooftop PV and other consumer energy resources (CER) at world-leading levels. More than one-third of homes across the country now host rooftop solar systems, helping households and businesses reduce their energy bills and directly contributing to the decarbonisation of the energy system.
There are increasingly frequent periods where rooftop PV generation is very high relative to current levels of underlying daytime consumption, and generation that exceeds household usage is exported to the local distribution system or even further upstream.
Underutilised PV output represents a major opportunity for consumers and businesses to capitalise on abundant cheap electricity by shifting more consumption to the middle of the day, reducing energy costs.
CER and behind the-meter flexibility (including electric vehicle and home or neighbourhood battery charging) can be harnessed to better utilise high rooftop PV generation.
Through collaboration on the National CER Roadmap and Project Jupiter in WA, we are helping lay the groundwork to scale customer energy participation through virtual power plants and addressing the technical, market and regulatory changes needed to support this transition.
From a system operator perspective, this includes improving CER visibility and predictability, enhancing operational forecasts and data streams to analyse CER response to system disturbances, and exploring pathways for resumption of distributed PV during system restart.
Concerted efforts to enable coordination and integration of rooftop PV and CER within the power system as uptake continues will support the secure and reliable delivery of electricity to all consumers, now and into the future.
So let me wrap up by saying that Australia’s energy transition is well underway, the direction is clear, but the challenges are complex…and need broad collaboration to ensure the solutions are best for all Australians.
It’s in that spirit that AEMO works closely with all our stakeholders, to chart the best pathway forward.
This includes our Integrated System Plan, together with more technical publications like the Engineering Roadmap and the Transition Plan for System Security.
This energy transition is a shared global effort. It includes governments, industry, and market bodies, consumers and communities, international partners, and the academic and research community.
We need to leverage multi-disciplinary networks and learn from one another.
I’m optimistic, and I look forward to the contribution of CIGRE and its members in this once in a generation challenge.
Thank you.