According to official analysis, electricity supplies across Australia’s eastern grid are expected to fall short of demand within three years unless new renewable energy and transmission infrastructure is brought online as soon as possible. The Australian Energy System Operator (AEMO) warns of reliability “gaps” hitting New South Wales beginning in 2025 and Victoria, Queensland, and South Australia by the end of the decade in its updated 10-year prognosis for the national electricity market, which will be revealed today.
The government agency’s warning comes after a time of market instability, with surging coal and gas prices fueled by Russia’s invasion of Ukraine and higher-than-usual demand.
A string of coal-fired plant outages has also played a role in the turmoil, affecting a fifth of the fleet in the eastern states at one point in June.
According to AEMO, supply concerns are anticipated to worsen in the future years as five coal plants close, removing 14% of total capacity from the National Energy Market.
An increase in demand is projected as part of attempts to electrify large segments of the economy, such as transportation.
The race for new capacity continues.
According to AEMO CEO Daniel Westerman, unless replacement capacity is built in time, demand is expected to outpace supply by 2025.
The first state to be affected would be New South Wales, where major energy retailer Origin has declared intentions to close Australia’s single largest power station, Eraring, in the same year.
Mr. Westerman, on the other hand, highlighted that the gaps were expected to expand to Victoria in 2028, Queensland in 2029, and South Australia by the beginning of the next decade.
“The research emphasizes the importance of advancing production, storage, and transmission innovations to provide a secure, dependable, and affordable supply of power to households and businesses,” Mr. Westerman said.
“Forecast reliability gaps have developed throughout NEM regions as a result of significant coal and gas plant closures and the lack of pledges to add new generating capacity needed to counter rising energy demand.
The ability of the transmission network to meet reliability standards and requirements for power system security will be hampered without additional expenditures, which will restrict the quantity of available generation.
The AEMO has urged governments and businesses to swiftly begin developing new renewable energy projects in order to fill the vacuum created by the retirement of coal and gas-fired capacity.
The projects, which have a total capacity of 3.4 gigawatts, or enough energy to power over two million homes, were deemed essential for keeping the lights on by the agency.
“Paying out of the nose”
A further statement from AEMO stated that five high-voltage transmission lines needed to “proceed as rapidly as feasible” in order to ensure that the additional green power could be delivered to the appropriate locations.
The research was intended to “bring ministers and industry’s feet to the fire,” according to the Australian Industry Group, which represents major manufacturers.
The organization’s director of climate and energy, Tennant Reed, acknowledged that given its obligation to uphold grid security, AEMO tended to err on the side of caution.
Mr. Reed claimed that various initiatives that would probably be operational within the report’s timeline were not taken into account.
The problem of replacing coal capacity that is about to retire, he claimed, is enormous and urgent.
To fulfill the current deadlines, Mr. Reed remarked, “We’ve got a lot of work to do.”
Since we will be paying exorbitant prices for power and gas over the following few years due to the pricing of coal and natural gas on foreign markets, in an ideal world we would be speeding up a lot of those timeframes.
The Ukraine invasion premium we will have to pay will decrease the quicker we can make the switch to sustainable energy.
But even meeting the current deadlines will be challenging for us; we must not even attempt the beneficial acceleration.
Transition at crunch point
Matt Rennie, a partner at the Brisbane-based energy consultant Rennie, endorsed the remarks.
The enormity of the changes upending the power grid was brought into stark relief, according to Mr. Rennie, by the forecast from AEMO.
The “great energy shift” that has been the subject of much discussion over the past ten years is now undeniably underway, according to Mr. Rennie.
“We’re now beginning to realize what happens when the coal runs out, and we’re questioning ourselves whether electrification is even possible.”
Mr. Rennie stated that Australia had to overcome three major challenges in order to create the green energy projects necessary to replace lost coal capacity.
The first was gaining access to the materials required to construct the transmission lines, solar farms, storage facilities, and wind turbines that would generate and deliver the energy.
The money needed to finance the once-in-a-lifetime construction boom was being attracted for a second.
Finding personnel who could execute the job, according to Mr. Rennie, was the last obstacle to overcome.
He responded, “The first question has a yes response, and the second question has a yes response.
“However, the third query is the most important.
“In order to deliver the electricity that will be required in the next 10 to 15 years, do we have enough men and women dressed in hard hats and high-visibility clothing?
“The labor market right now is as tight as it’s ever been.
Everyone is undergoing electrification at the same time, thus we expect a severe labor shortage will be necessary to complete this.
“No one wins” from disorder
The tightness of the market as forecasted by AEMO, according to Lisa Zembrodt, director of energy markets at French giant Schneider Electric, should be a call to action for governments.
A comprehensive strategy that could direct everyone away from a system run on fossil fuels and toward one powered by renewable sources, according to Ms. Zembrodt, was a critical component of Australia’s energy transition that was still absent.
evening traffic entering the Melbourne CBD
“The situation is not as bad as what is laid down in the [AEMO] basic case,” Ms. Zembrodt added.
“The market still needs more supply, though.
“In order to move forward with our plan, we specifically need to increase the amount of renewable capacity, storage, and demand optimization.
“We can’t put off bringing in new renewable capacity and storage.”
Few people, according to Ms. Zembrodt, benefit from the disorderly energy markets.
When energy costs are excessive, she said, “it’s definitely very difficult for an economy to develop.”
The driving force behind any economy, households, are, of course, also put under a lot of stress.