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15 September 2022

Australia’s electricity supply will fall short of demand without investment – AEMO

Urgent generation, storage and transmission investments are needed in the next ten years to avoid reliability gaps, finds a new report by the Australian Energy Market Operator.

By Nour Ghantous

Australia faces electricity security of supply risks in all National Electricity Market (NEM) mainland regions within the next ten years, warns the Australian Energy Market Operator (AEMO) in a new report.

“Forecast reliability gaps have emerged across NEM regions due to considerable coal and gas plant closures, along with insufficient new generation capacity commitments needed to offset higher electricity use,” said Daniel Westerman, CEO of the AEMO, at the launch of the operator’s 2022 Electricity Statement of Opportunities on 31 August.

In the short to medium term, without additional investment, the AEMO forecasts reliability gaps in South Australia (2023–24), Victoria (2024–25) and New South Wales (2025–26). Longer term, it forecasts gaps across all mainland regions.

Westerman pointed out that at least 8.3GW of coal-fired generation capacity will go offline in the next decade, or approximately 14% of the NEM’s total capacity. Without further investment, this “will challenge the transmission network’s capability to meet reliability standards and power system security needs”.

The AEMO’s 2021 report did not forecast any electricity security of supply threats in Australia, concluding that “existing and committed future electricity supply is projected to be adequate to support forecast demand under most conditions prior to the expected closure of Victoria’s Yallourn [coal] Power Station in 2028”.

The AEMO says recent amendments to the National Electricity Objective, which added cutting emissions to its list of priorities, “will greatly assist in improving the investment environment and enable the transformation of the NEM in the medium term”.

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