Put renewables on fast track, says AEMO

Australia must accelerate a move away from coal to renewables and storage and urgently sanction more than $10bn of transmission projects.

Nearly two-thirds of all coal capacity will be shut down by 2030 under the AEMO’s plan.

Australia must accelerate a move away from coal to renewables and storage and urgently sanction more than $10bn of transmission projects to escape the ongoing threat of blackouts and high power prices amid a national ­energy crisis.

The Australian Energy Market Operator, which runs the ­national electricity network, said the country was undergoing a “complex, rapid and irreversible” change to its energy system that would need a nine-fold increase in wind and solar capacity by 2050 to meet the nation’s net-zero emissions targets.

The energy supply crunch that forced the suspension of the country’s power market for the first time this month underscored the need for the Australian electricity grid to curb its exposure to the volatile commodities of coal and gas and fast-track cheap renewables backed up by storage, the AEMO said.

“I think recent events in Australia and overseas have really just underscored the need for ­urgent investment in renewables, firming and transmission so that we can de-link ourselves from these international factors and provide Australian homes and businesses with the most affordable, secure and reliable energy,” AEMO chief executive Daniel Westerman told The Australian.

AEMO chief executive Daniel Westerman. Picture: Nicki Connolly

Power and gas prices have soared in Australia this year, with the surge linked to international factors such as the Ukraine war, a global gas crunch and Australia’s reliance on old coal-fired power stations.

Some 150 gigawatts of energy supplies, nearly triple the current generation and storage capacity of the Australian market, has been proposed by companies and investors by 2032 with large-scale solar and wind backed up by battery storage accounting for 88 per cent of the project pipeline.

G7 leaders have pointed to gas as a critical fuel to guide the world’s biggest economies through a global energy crisis, but Energy Minister Chris Bowen said Australia must accelerate a shift to greater renewable ­supplies.

“One source of energy that no geopolitical situation can interrupt in relation to our supply chains and that’s the sun to our land-mass and the wind on and off our shores. That’s good energy security and storing that is a matter of national security,” Mr Bowen told the National Press Club.

 

The final version of AEMO’s blueprint for power grid investment over the next 30 years, known as the integrated system plan, is released on Thursday and largely retains the set of assumptions and forecasts made in a draft paper released in December 2021 under a “step-change” scenario seen as the most likely path forward by the industry.

Nearly two-thirds of all coal capacity will be shut down by 2030 under the AEMO’s plan.

The exit of coal, which provides more than 60 per cent of current electricity capacity, will require triple the current levels of hydro, gas and batteries to replace the fossil fuel by 2050, with ­double the amount of electricity needed as transport, heating, cooking and industrial processes are electrified.

A third of detached homes already have solar on their rooftops in Australia and that will jump to over half of homes by 2032, growing to 65 per cent by 2050.

While some 8GW of coal is currently set to exit by 2030, the AEMO predicts that could nearly double to 14GW by the end of the decade, given the number of generators bringing forward retirement of ageing plants.

All of Victoria’s brown coal plants would be retired by 2032 under the plan, compared with plans by Alinta to run Loy Yang B until 2047.

“The gas and coal price volatility hitting global energy markets from the first half of 2022 ­places additional pressure on the profitability of Australia’s generators, raising uncertainty – and the possibility of unexpected early closures,” the AEMO said.

Still, it warned that poor co-­ordination of coal plant shutdowns could quickly pressure energy prices and system reliability, given the risk that replacement generation and transmission may not be installed in time.

Breakdowns of coal units have contributed to tight supplies and the threat of blackouts in Australia’s eastern states along with soaring power bills, but the AEMO said the current energy crisis underlined the need to fast-track a move to clean energy.

The AEMO strengthened its language on transmission, saying five major projects covering 10,000km to connect up new renewables supplies needed to be built “as urgently as possible” as fears grow that big storage schemes like Snowy 2.0 may see new supplies stranded if developments are not delivered on time.

The five schemes are the Hume­Link connecting the expanded Snowy Hydro scheme to southern NSW; the VNI West interconnector between NSW and Victoria; a boost to the existing network outside Sydney’s Ring; and the giant New England renewable energy zone connection.

The Marinus Link, a second power cable connecting Tasmania to Victoria, is already delayed by two years and will not start until 2029.

Labor has proposed a $20bn Rewiring the Nation fund to ensure the grid is rebuilt to accommodate growing sources of solar and wind and the AEMO said more government support might be needed given the urgency to deliver new transmission including Canberra underwriting or investing in the facilities.

“For each of the five transmission projects that we’re talking about, what we’re calling for is for them to be progressed as urgently as possible,” Mr Westerman said.

Originally published as Put renewables on fast track, says AEMO