New solar, wind and battery boosts reliability outlook, but AEMO says no room for more delay

The Australian Energy Market Operator has offered a neat demonstration of what a difference a few committed solar, wind and big battery projects can make to an electricity market outlook, with warnings of looming supply gaps issued just months ago absent from AEMO’s latest 10-year forecast.

The 2024 Electricity Statement of Opportunities (ESOO), published by AEMO on Thursday, says the progress of nearly 6GW of grid-scale generation and storage projects, and 365 km of new transmission lines, has made for a much less gappy outlook for the National Electricity Market.

“Compared to last year’s report, the reliability outlook has improved,” AEMO CEO Daniel Westerman said in a statement. And it needed to, after delays to key projects in New South Wales led AEMO to issue an interim notice, in May, warning of shortfalls in supply for the state in the summer of 2025/26.

The May update, spurred by delays in major grid upgrades and a big battery project, forecast that NSW would need another 510MW to be delivered in time to make up for the closure of the state’s largest remaining coal plant, Eraring.

This was enough to spook the NSW government into cutting a controversial deal with Eraring’s owner, Origin Energy, to keep the plant open for two years longer.

Four months later this threat has subsided – but only, as the AEMO chief continues to stress, so long as Australia’s rollout of firmed wind and solar continues to be delivered “on time and in full.”

“Investments in renewable generation and storage continue to increase, and the pipeline of new projects continues to expand, filling the gaps being left by the retirement of Australia’s ageing coal fired power stations,” Westerman said on Thursday.

“It is critical that expected investments in generation, storage and transmission are delivered on time and in full. If delays occur to projects already underway or further investment does not materialise, then the outlook for reliability will deteriorate.”

This could be read as a direct message to leader of the federal opposition, whose coalition with the National Party has threatened to put the renewable energy transition on ice while it develops a nuclear power industry out of nowhere and nothing.

Certainly, this is how the Albanese government is choosing to interpret AEMO’s 2024 outlook – and warnings.

“The latest ESOO confirms our federal government programs, including Rewiring the Nation and the Capacity Investment Scheme, will improve the strength of the grid and reduce reliability risks,” federal energy minister Chris Bowen said on Thursday.

“The Opposition’s plan to stop renewables from mid-2025, ‘sweat coal’ assets and significantly expand gas will leave Australians paying more to be stuck sitting in the dark.

“Peter Dutton is asking Australians to back his $600 billion nuclear investment, which will only secure 4% of Australia’s energy needs in 2050 nearly two decades from now.”

For the next 10 years, at least, AEMO’s report says that the addition of 3.9 GW/13.5 gigawatt hours (GWh) of batteries, 1.2 GW of large-scale solar and 0.4 GW of wind since the 2023 ESOOmore consumer installed rooftop PV has improved the reliability outlook.

HumeLink, the 365 km transmission line that will connect Wagga Wagga, Bannaby and Maragle, has also been added to the mix, as “an anticipated project which will improve reliability risks in New South Wales.”

But the report highlights the importance that expected investments in new generation, storage and transmission are delivered according to plan, to maintain a reliable supply of electricity to homes and businesses.

If projects are delayed then there will be reliability gaps – although these, too, are now projected to be smaller than those forecast previously.

The areas of potential concern highlighted in the 2024 ESOO include Victoria in 2024/25, 2027-28 and from 2028-29 after the Yallourn coal plant is set to retire; NSW this coming summer, again in 2027-28 when Eraring is now slated to retire, and from 2031-32; and South Australia this coming summer, again in 2026-27 when Torrens Island B and Osborne Power Stations close down, and in 2033-34.

AEMO says it is tendering for off-market reserves in Victoria, NSW and South Australia this summer to manage potential low reserve conditions, alongside the usual “extensive summer preparations with industry” to power the grid through peak demand periods.