The Australian Energy Market Operator (AEMO) has released its 2023 Electricity Statement of Opportunities (ESOO) report, providing a 10-year reliability outlook for each state in the National Electricity Market (NEM).
The ESOO is created utilising insights from developer and market participant surveys, transmission data, and a comprehensive examination of energy constraints, such as the possible impact of drought conditions and coal and gas supply shortages.
“This year’s report highlights the pace of Australia’s energy transition and the urgency needed to deliver new investment to ensure reliable, affordable and cleaner energy for consumers,” AEMO CEO Daniel Westerman said.
According to Westerman, the 10-year outlook predicts reliability gaps due to the projected retirement of 62% of the coal fleet by 2033.
“To ensure Australian consumers continue to have access to reliable electricity supplies, it’s critical that planned investments in transmission, generation and storage projects are urgently delivered,” he stated.
Over the next decade, electricity consumption and peak demand are expected to rise due to population growth, economic activity, and electrification across all sectors of the economy.
Reliability risks are predicted to exceed the relevant standard in Victoria, New South Wales, South Australia, and Queensland, based on the ESOO’s ‘central scenario’.
The reliability gaps indicated by the ‘central scenario’ are an essential aspect of the electricity planning process since they signal, and in some circumstances obligate, electricity retailers to contract enough capacity to provide a reliable power system.
“While our central scenario shows increased reliability risk, it does not reflect the reliability potential from the 248 gigawatt (GW) pipeline of proposed generation and storage projects, actionable transmission projects and government energy programs underway,” Westerman said.
Westerman stated that government initiatives such as transmission projects listed in the Integrated System Plan and mechanisms delivering firming capacity, such as the Australian Government‘s Capacity Investment Scheme, if completed on time, can address highlighted concerns over a 10-year timeframe.
“There is also the opportunity for consumers’ rooftop solar, batteries and electric vehicles to actively participate in the power system, which would further reduce reliability risks,” he added.
According to the AEMO, in comparison to last summer, around 3.4 GW of new generating and storage capacity is likely to be available this summer, which is expected to be hotter than previous years, implying that electricity demand may be higher than previously reported.
“We’re expecting an elevated level of risk compared to recent years, mostly due to hotter and drier conditions, and coal-fired generation reliability is at historic lows,” Westerman said.
He stated that the entire industry focus on risk management in the coming summer, particularly during high-demand periods accompanied by power outages and low renewable output, but some risk remains.
“In the longer term, AEMO will continue to collaborate with industry and governments to deliver energy projects to maintain reliable and affordable electricity for all consumers,” he added.
