‘Step change’: $12b plan for new electricity grid
Electricity consumption will double and grid-scale wind and solar capacity will grow nine-fold by 2050 according to the Australian Energy Market Operator (AEMO).
In the 2022 Integrated System Plan (ISP), released on 30 June, AEMO says $12.7 billion investment in electricity transmission projects will be needed to accommodate the rapid change.
But, AEMO says, overall savings elsewhere will deliver net benefits that far outweigh the initial costs.
Transmission networks will also have to handle a tripling in firming capacity (dispatchable storage, pumped hydro and gas-fired generation) and a near five-fold increase in distributed solar as Australians boost their world-leading uptake of rooftop solar.
The ISP identifies recent events, such as accelerated coal-fire power closure and energy commodity instability as evidence urgent investment is required.
AEMO, which manages electricity and gas systems and markets across Australia, says the ISP outlines a 30-year roadmap of investments for the National Electricity Market (NEM).
Based on rigorous economic and engineering analysis, AEMO’s third ISP has involved more than 1500 stakeholders, including policy makers, governments, consumers and energy industry representatives.
The most likely future for the NEM is identified as a “step change” scenario, with 60 per cent of current coal generation retiring by 2030 and electricity consumption from the grid doubling by 2050 as transport, industrial processes and domestic energy use switches to renewable electricity sources.
The previous 2020 ISP assumed a less ambitious ‘central scenario’ as the most likely pathway for the electricity transition.
The ISP forecasts net market benefits of $28 billion, or 2.2 times their cost of $12.7 billion.
Five projects, ready for immediate action, are earmarked as urgent:
AEMO CEO Daniel Westerman says the need to cost-effectively deliver the investment has gathered momentum in recent months.
“We’ve recently seen market dynamics exhibiting the step-change scenario, including accelerated coal-fired power station closures,” Mr Westerman said.
“In addition, generation unavailability and high commodity prices further highlight the need to invest in the transmission plan outlined in the ISP to support firmed renewables,” he said.
“Importantly, the ISP will help meet state and national climate targets, and contribute to economic growth through low-cost reliable energy,” he said.