The electricity network in Australia – a fossil fuel energy superpower – is increasingly held together with hopes, tissue paper and spit.
The latest warning from the Australian Energy Market Operator is that things are worse than was predicted only a few months ago. It is the story of the renewable energy transition.
Battery, wind and solar projects have struggled to get from promise to reality. The electricity grid network is not designed for what it increasingly is being asked to do.
The situation can only be saved by many billions of dollars worth of further investment supported by a long list of government subsidy programs.
AEMO has abandoned subtlety and all discretion. It highlights the “urgency for the timely delivery of transmission, generation and storage, and use consumer electricity resources to support the grid”.
AEMO chief executive Daniel Westerman tells us what we already know: “Project development and commissioning delays are impacting reliability throughout the horizon.”
Households, and their yet to be purchased electric cars, are now a key part of keeping the lights on in future.
Reliability risks have increased in the two most populous states, NSW and Victoria, from 2024-25 to 2027-28 and increased in South Australia in 2026-27.
The situation has become so dire AEMO will tender for “interim reliability reserves” as early as the coming year.
The long-term solution, AEMO says, lies in state and federal governments opening the taxpayer wallet through a myriad of high-cost schemes; a federal capacity investment scheme to underwrite the profitability of big projects. Progress on the stalled NSW electricity infrastructure roadmap. A Queensland energy and jobs plan. A fresh Victoria renewable energy target, storage target, offshore wind policy or investments by a nationalised state electricity commission. And further developments to support the federal government’s Powering Australia Plan commitment to increase renewable energy generation to 82 per cent of supply by 2030.
As well as a shortfall of generation projects, the AEMO report highlights two more inconvenient truths.
There will need to be new investment in ancillary services to replace the benefits of having big baseload plants operating on the grid.
“Over the coming decade, the rapid energy transition will result in a significant need for new assets and providers of these essential system services, including for system strength, frequency management, voltage control, ramping capability, and system restoration services”, AEMO says.
And, such is the state of the electricity network, there currently are limited options for where new supply can be added to make a difference when things get tight.
“Without further transmission development there are limited locations in each mainland region that can support new generation and storage that will benefit power system reliability,” AEMO says.
The report paints a picture of a low emissions transition that is being planned belatedly and on the run. The track record of delivery does not give confidence that, left unchecked, things will improve anytime soon.
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