WA power supply outlook improves but new projects needed to replace coal

The power system servicing WA’s south-west is in good shape for the next three years but massive investment in extra generation and storage capacity is needed to replace Collie’s coal-fired power stations, according to a report the Australian Energy Market Operator released on Tuesday.

AEMO WA manager Kate Ryan said the significantly improved outlook for the next three years was due to investment on a scale not seen in decades on the South West Interconnected System.

Beefed up transmission capacity along with more generation and storage and flexible demand are the key solutions to replacing coal-fired power stations.Credit: Peter Braig

Ryan said 1000 megawatts of extra capacity secured by tenders to AEMO and a 500 megawatt battery being built by state-owned generator Synergy in Collie had turned around what had been predicted to be a difficult 12-months starting in mid-2026.

In its annual Electricity Statement of Opportunities for WA AEMO said the timely delivery of the projects despite labour constraints and global supply chain issues was critical.

AEMO is predicting a small shortfall this summer but expect it to be addressed by a tender for additional capacity and the state government’s decision to keep a turbine at Synergy’s Muja power station in reserve for six months after it was planned to be retired.

More seriously, in 2027-28 AEMO is predicting a shortfall of generation capacity of almost 400 megawatts, increasing more than sevenfold over the following six years to 2880 megawatts in 2033-34.

“This highlights that critical investment in power generation, storage, demand-side response and transmission will be needed to meet demand and replace retiring coal-fired power stations by 2030 and beyond,” Ryan said.

Part of the solution is a reserve capacity mechanism where AEMO sets out two years ahead of time the additional capacity it is willing to purchase to maintain power reliability. A federal government capacity investment scheme is also expected to help.

AEMO was monitoring the progress of a substantial number of projects that could fill this gap. Wind farms in particular face long environment approval processes and are dependent on state-owned transmission provider Western Power building sufficient capacity where it is required.

The rise in output from rooftop solar panels was forecast to accelerate due to homeowners installing larger systems, leading to a risk that at times no other generation would be required. Battery storage and management of the output of the panels is expected to avoid this situation.

AEMO predicts little growth in demand for purchased power over the next few years, but more electric vehicles and industry and homes switching from gas to electricity will drive a need for more power in the latter half of the 10-year forecast period.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.