AEMO report spotlights failings

Having travelled to South Australia to launch the voice campaign, Anthony Albanese, while he was there, would have been wise to check on the slow progress and big risks that characterise the nation’s renewable energy transition. The updated report from the Australian Energy Market Operator reflects the real and pressing dangers presented by a failure to deliver projects in a timely and efficient way.

AEMO says project development delays and broader supply chain challenges are emerging as material risks to the delivery of transmission, generation and storage projects. It says delays to the delivery of projects, relative to the dates envisioned by the schemes and proponents, have the potential to result in periods of high risk throughout the 10-year horizon. Long held up as a renewable energy exemplar, SA is particularly at risk and is facing a potential shortfall as early as this summer.

The AEMO report reflects the inevitable crunch that results from the loss of spare capacity in Victoria to backstop SA’s renewables-heavy grid. Equally alarming is the concession by AEMO that new and improved weather data and modelling have identified a higher forecast occurrence of low wind and high-demand conditions in Victoria, resulting in a higher forecast reliability risk for SA and Victoria. This is a serious development given the experience in Europe, where extended periods of wind drought have led to energy market chaos.

None of the AEMO findings should surprise anyone who has been paying attention to what has been happening in recent weeks. The Clean Energy Council has warned that in the first half of this year investment in energy generation projects has fallen to its lowest level since it began tracking project data in 2017. Meanwhile, construction of large-scale transmission infrastructure and back-up projects such as the Snowy 2.0 hydro-electric scheme are facing much higher costs and much slower progress than predicted. This is all in sharp contrast to the fast pace of wind, solar, transmission and storage deployment the federal government says is needed to meet its legislated target of 82 per cent renewables by 2030.

In another sign of reality trumping hope, AEMO has downgraded the contribution that households might be prepared to make to grid stability. It says schemes to orchestrate and co-ordinate consumers’ generation and storage devices to support reliability have not yet demonstrated success at significant scale. As a result, AEMO says, the impact of potential coal, gas and diesel fuel shortfalls has been identified as a material risk to the reliability of the national electricity market. AEMO says that in addition to the need for new generation, transmission and other solutions, the ongoing availability of coal, gas and distillate fuels, and effective management of their supply chains, will be critical to reliability.

The report must be a wake-up call for government that the energy transition is not going as smoothly as some would suggest. This includes Energy Minister Chris Bowen, who has determined the fact the 2020 renewable energy target was met means that the more ambitious 2030 target will be met as well. This ignores the reality that things get harder as the percentage of renewable energy increases and pushes out baseload power. AEMO’s warning confirms this is the case. The public and industry are paying a heavy price for a transition that is loaded with risk and deserve to know that those responsible have a credible plan to deal with the issues highlighted by AEMO.