AEMO warns contingency plans needed to avoid outages during energy transition

The country’s energy market operator warns contingency plans are needed to avoid power outages during Australia’s rapid transition away from coal-fired power stations.

The energy market operator has warned state and federal government contingency plans are needed to avoid the heightened risk of outages during Australia’s rapid transition away from coal-fired power stations.

Australia’s fleet of coal power stations are expected to all have retired by 2037, but the Australian Energy Market Operator (AEMO) wants more timely information in some jurisdictions to improve its capacity to manage the grid.

The rapid transition will cause substantial challenges for AEMO in meeting its mandate - ensuring sufficient generation to meet demand.

“AEMO anticipates significant operational challenges to emerge as thermal generating units retire and will develop operational procedures for scenarios where insufficient synchronous units are available for AEMO to direct to meet the minimum regional system strength requirements,” AEMO said in its latest General Power System Risk Review.

Under the Albanese Labor government, Australia’s electricity grid is undergoing what AEMO said is once a century type evolution, which is expected to see renewable sources of energy produce more than 80 per cent of the country’s power by 2030.

The Coalition has proposed an alternative plan that would see the creation of seven power stations, though it accepts the first one would be ready in 2037. It has not yet disclosed whether it would run coal for longer until enough nuclear power stations are operational.

However, AEMO chief executive Daniel Westerman has said nuclear power is not a viable replacement for coal as it will take too long to develop.

His comments heighten pressure on the Coalition to spell out how it intends to power the country for the seven or so years after the phasing out of coal-fired power stations.

AEMO has said it is critical Australia must build a series of new high transmission lines but the agency has also warned of serious consequences should they fail.

AEMO said the HumeLink transmission project is particularly important and can not be allowed to short circuit.

The Coalition has pledged to build seven nuclear power plants across Australia. Multiple Coalition MPs said the proposed former coal-fired power station sites for the reactors included Loy Yang in Victoria. Picture: Jake Nowakowski

The 500-kilovolt, 360KM project in southern NSW will not only connect to the Snowy 2.0 pumped hydro storage project but also a transmission line being built to South Australia.

A failure would disconnect Snowy 2.0 from the grid, leaving Australia’s new grid dangerously exposed to periods when renewable energy generation is limited.

The 2000MW pumped hydro storage project in NSW has been beset by problems causing prolonged delays and swelling the taxpayer bill. Snowy was initially projected to cost around $2bn and be completed in 2021, but was revised to nearly $6bn. After a spate of technical problems and disruptions from Covid-19, the bill is now expected to be around $12bn

But no other pumped hydro project has the same scale and a grid dominated by renewables will be underpinned by Snowy 2.0, which will be able to use abundant, very cheap renewable energy to push water uphill. Once the sun has set or there is insufficient renewable energy generation - Snowy will release the water downhill and turn the turbines.

The development of renewable projects is critical as some of Australia’s coal power stations are approaching the end of their technical lifespan.

Victoria is one of Australia’s most coal dependent states, but two of its three coal power stations will be shuttered within the next decade.

AEMO, however, said Victoria has a vulnerability - a circuit breaker fail event in Latrobe Valley that the agency said could lead to the tripping of multiple large generating units and Basslink instability

AEMO said there was a need for an urgent solution.

“Given the criticality of the site for system reliability as well as system strength and security, AEMO recommends that AEMO Victorian Planning design and implement a suitable solution to improve the overall resilience of the Loy Yang substation as a priority,” said AEMO.