AEMO: Australia Needs to Spend $12.7 Billion on Urgent Projects to Secure Energy Supply

AEMO: Australia Needs to Spend $12.7 Billion on Urgent Projects to Secure Energy Supply
Image: iStock

The Australian Energy Market Operator (AEMO) has released a 30-year roadmap for its Integrated System Plan, calling for “essential and efficient investment in the National Energy Market (NEM)”.

The plan comes at a pretty dire time for the NEM. Just two weeks ago, AEMO shut down the NEM, suspending competitive pricing for energy retailers and setting a fixed price. Before then, energy providers like Revamped Energy warned of drastically rising energy prises, telling their customers to find better deals through other providers.

Last week, we saw Sun Cable, a solar power generation plant set to be built in the Northern Territory, approved for investment. It’s planned to be the biggest solar project in the world.

“Australia is experiencing a complex, rapid and irreversible energy transformation,” said Daniel Westerman, the CEO of AEMO.

“The 2022 [Integrated System Plan] informs Australia’s energy transformation, based on an ‘optimal development path’ of essential transmission investments that will efficiently enable low-cost, firmed renewable energy to replace exiting coal generation.

“These transmission projects are forecast to deliver $28 billion in net market benefits, returning 2.2 times their cost of $12.7 billion, which represents just 7 per cent of the total generation, storage and network investment in the NEM.”

That’s right: AEMO is calling for a $12.7 billion investment in building out the grid, focusing on five projects where progress should be made as  urgently as possible: Humelink, VNI West, Marinus Link, Sydney Ring and New England REZ Transmission Link.

aemo 30-year
Image: AEMO

Additionally, AEMO and its stakeholders have considered the future of the NEM, calling it the “step change” scenario, involving technical innovation, ageing power plants, policies, economics, energy security and consumer choice. A big part of this is the shift to renewables.

“To maintain a secure, reliable and affordable electricity supply for consumers through this transition to 2050, investment is required for a nine-fold increase in grid-scale wind and solar capacity, triple the firming capacity (dispatchable storage, hydro and gas-fired generation) and a near five-fold increase in distributed solar,” added Westerman.

“The step change scenario forecasts annual electricity consumption from the grid will double by 2050, as transport, heating, cooking and industrial processes are electrified and 60 per cent of current coal generation exiting by 2030.

“We’ve recently seen market dynamics exhibiting the step change scenario, including accelerated coal-fired power station closures. In addition, generation unavailability and high commodity prices further highlight the need to invest in the transmission plan outlined in the [plan] to support firmed renewables.”

You can read more about AEMO’s 30-year plan on its website.