Consumer attitudes and earlier coal closures: AEMO mulls scenario tweaks ahead of new grid blueprint

The Australian Energy Market Operator has flagged potential tweaks for its forecasts relating to consumer energy resources, the gas market, the timing of coal closures and the uptake of electric vehicle take-up at it continues to work on scenario planning for the next iteration of its multi-decade blueprint for the grid.

The Inputs, Assumptions and Scenarios Report (IASR) is one of the key components in the preparation of AEMO’s Integrated System Plan, the grid blueprint that has become essential for guiding and responding to government policy, investment decisions and infrastructure decisions as coal fired power stations exit the grid.

AEMO on Friday released a “stage 2” of its Draft IASR for the 2026 version of ISP, a testimony in itself to the extraordinary level of planning and research and consultation that goes into the ISP. The ISP attracts criticism from some quarters, most notably the nuclear lobby, but it’s certainly not a rush job.

The 222-page stage 2 draft comes just two months after the initial draft was released in December, and reflects some more industry inputs that have been fed into the equation, and some rule changes that affect its preparations.

The three big movers appear to be the way that AEMO is looking at consumer energy resources (CER), the development of the gas market, and the uptake of EVs.

Some of the changes have been imposed on it by the new rule changes that require it to better integrate consumer sentiment, gas and demand-side factors in the ISP.

CER – which mostly reflects household resources such as rooftop solar, battery storage and EVs – is considered important because, according to prior ISPs, they will likely account for more than half of total generation in years to come as Australian moves from a largely centralised to a distributed grid.

Harnessing that CER is considered crucial, but the latest publication raises questions about how easy and feasible that will be, given that many consumers may be reluctant to hand over control of their own assets to another party.

“Consumers are tentative to share control and coordinate the operation of their consumer energy devices through a third party such as their electricity retailer,” the document says.

Investment in CER, particularly in rooftop solar and batteries, reflects that households place high value on the benefits provided by these systems, and typically install relatively large household systems to improve their self-supply.”

The issue is also being addressed by the NEM market review being led by energy economist Tim Nelson, who told the Energy Insiders podcast this week that household batteries – including his – are geared to optimise individual usage rather than providing grid-wide services that could help reduce costs for everyone.

A number of other tweaks are being considered for the scenario inputs, including the latest green hydrogen forecasts and industry developments, and the potential for a more rapid closure of coal fired power stations, based around additional and earlier investments in firming capacity such as large scale storage.

“This sensitivity has been proposed to address an action from the Response to the ISP Review to analyse the sensitivity of the optimal development path to alternative coal-fired generation shutdown schedules,” the document says.

“Within the scenario modelling in the ISP, retirements of coal-fired generators may be brought forward ahead of expected closure years (for example, due to policies or carbon budgets), as described in the ISP Methodology.

“For this sensitivity, AEMO proposes to impose alternative coal retirements to those assessed in the scenario modelling, to examine the impacts on future power system requirements and the optimal development path.”

AEMO’s executive general manager of System Design, Merryn York, says stakeholder engagement has been critical to refining the IASR to achieve better outcomes for energy consumers.

“These new draft inputs – ranging from energy efficiency policies to decarbonisation forecasts – alongside the assumptions and scenarios from Stage 1, will guide AEMO’s forecasting and planning activities,” York said in a statement.

“We encourage stakeholders to share their views on the Stage 2 report in our formal consultation process, culminating in the final IASR mid-year,” she said.

AEMO says it will be hosting a webinar on the Stage 2 report. The final 2025 IASR is expected to be published by July 31.