AEMO says renewables pipeline sufficient, but only if delivered on time
The outlook marks an improvement compared with previous years, but it also illustrates the precarious nature of Australia’s transition away from coal.
Australia’s renewable energy pipeline is large enough to safeguard reliability across the National Electricity Market during the next decade but only if projects are delivered on schedule and government support schemes translate into real investment, the Australian Energy Market Operator has warned.
The finding, in AEMO’s latest assessment of the National Electricity Market, was seized on by the Albanese government as vindication of its plan to accelerate investment in wind, solar and storage to hit its target of 82 per cent renewable generation by 2030. But the operator’s conclusion also underscores how fragile the transition remains.
AEMO noted that if it considered only the most advanced of prospective projects, reliability gaps – periods when the market cannot guarantee sufficient electricity supply to meet demand – would emerge.
“When considering only those energy supply infrastructure developments that have made sufficient progress against AEMO’s commitment criteria, reliability gaps are forecast in Queensland, South Australia, Victoria and NSW over the next decade,” the operator said.
This highlights the importance of federal and state support to deliver additional generation, transmission, flexible demand resources and consumer assets such as batteries, which can be co-ordinated to reduce reliance on utility-scale investment.
AEMO chief executive Daniel Westerman said the delivery of projects in the investment pipeline – including generation, storage, transmission and consumer energy resources – was likely to meet reliability standards over the coming decade, but only if new projects materialised.
“Considering the large volume of generation retirements over the next decade, the timely delivery of new generation, storage and transmission, along with the operation of consumer energy resources to support reliability, remains critical,” Mr Westerman said.
The assessment marks a shift from the stark warnings AEMO has issued in the past two years about looming supply shortfalls, which prompted increased government commitments and the extension of NSW’s largest coal-fired power station.
Origin Energy’s Eraring coal-fired power station, which generates about 20 per cent of NSW’s electricity, will remain open until at least 2027, having previously been set for closure this year. Its planned retirement had been a key reason AEMO previously flagged reliability gaps for Australia’s most populous state.
Energy Minister Chris Bowen said AEMO’s report was further evidence that Labor’s energy plan was working.
“Today the market operator has again reminded Australians that ageing, unreliable coal poses a real risk to our energy system, but increasing investment in reliable renewables, backed by clear government policy, is securing our energy future,” he said. “Australians can have confidence that our plan is working: we are making the system cleaner, fairer and more reliable while ensuring we replace retiring coal with the firmed renewables of the future.”
Still, AEMO’s implicit warning that projects must be completed on time illustrates the precarious nature of the energy transition. Several of the nation’s most prominent infrastructure developments, such as Snowy Hydro 2.0 and interstate transmission lines, are running behind schedule.
Future projects also face headwinds from slow planning approvals, pockets of landowner opposition and a global transition that has increased competition for materials and skilled labour – factors that continue to stoke scepticism about Australia’s capacity to deliver the generation required.
To deliver its green agenda, Labor has promised to underwrite more than 40GW of renewable energy projects under a scheme guaranteeing developers a minimum rate of return. While the Capacity Investment Scheme has proved popular, critics note it does not compel developers to build.
Meanwhile, many major transmission lines – which must be completed before renewable energy projects can proceed – are also experiencing delays.
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