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Updated energy forecast predicts ‘tight’ summers and urges delivery of projects to meet our needs

– Bridget Ryan, Policy & Industry Engagement Manager, RE-Alliance.

With winter coming to an end, the Australian Energy Market and system Operator (AEMO) released its 6-monthly forecast of our energy situation over the coming 10 years. The Electricity Statement of Opportunities (ESOO) is a twice-yearly assessment that provides an update on what the likely energy demand and supply mix will look like and what the risks are.

In releasing the report, AEMO stressed that the forecast added even stronger evidence on the urgency to deliver new investment in and build of new generation, storage and transmission to deliver reliable, affordable clean energy for all consumers. Their outlook predicts an increased risk that electricity supply could be insufficient to meet demand at peak times this summer in Victoria and South Australia and next summer in New South Wales. Looking a little further out, supply-demand balance is likely to be at risk for South Australia (again) in summer 2028-29 and in Queensland in summer 2029-30.

What’s putting pressure on the reliability of electricity supply?
There are at least 3 reasons AEMO provides why the outlook for reliability is not good:

  1. Coal power is becoming increasingly unreliable 
  2. Delays to the development of replacement renewable energy and associated transmission projects
  3. Solutions that coordinate home and business solar and battery storage are not scaling.

Another key reason for reliability concerns is the likelihood of hotter, drier temperatures this summer, which will mean electricity demand is likely to be higher compared to the last few years, even though 3.4GW of new generation and storage capacity will be available – enough to power over 2 million homes.

What happens during summer for those ‘at risk’ regions?
The most at risk regions, according to AEMO for this summer, are Victoria and South Australia. So how are these risks managed? AEMO, along with generators, energy storage facilities, retailers and big energy users, work together to manage and minimise risks to energy supply. In addition to large energy consumers such as smelters and cement producers, households can also play a role in reducing demand, such as waiting until bedtime to turn on the dishwasher and reducing air-conditioning settings. 

While a small proportion today, there is also opportunity for consumers’ rooftop solar, batteries and electric vehicles to actively participate in the power system, adding more supply when needed to meet demand at peak times.

What can households do about the risks to reliability?
In the short term, especially in the states with reliability risks this summer, we can focus on reducing demand. Switching appliances off or down will help. Making the most of solar energy generation, if you have it, to power appliances/equipment during the day. And – whether you have solar or not – making use of energy at off-peak times will reduce the reliability risks.

The things that the energy market, state and federal governments and industry need to do, though, is get on with implementing existing policies to bring on the renewable energy projects and transmission that are essential to transitioning away from a reliance on ageing, expensive and increasingly unreliable coal power. AEMO’s assessment says that nearly all risks can be addressed through existing planned projects. The Federal Government’s capacity investment scheme being delivered on schedule is important here. So too are building transmission links connecting NSW to South Australia and Victoria. The challenge is to speed up the delivery while ensuring landholders and local communities hosting the new solar farms, wind farms and transmission lines are properly paid and adequately supported throughout the process to have their say in project design, to minimise impacts and maximise local benefits. 

To complement large-scale renewable energy and transmission projects, investing in accelerating the deployment of distributed energy, such as rooftop solar, and uptake of energy efficiency will help to bring online even more capacity at peak times and lower demand, further reducing reliability risks. This needs to focus on enabling more uptake of solar and storage in regional and rural locations. These actions make sense in helping to bring down household and business energy bills for good and ensuring the energy transition is delivered fairly and fast. The Federal Government could accelerate the uptake of distributed energy by providing rebates and mandating the inclusion of solar and energy efficiency measures in new home builds. 

P.S. On NSW's Eraring coal power station being extended beyond 2025, AEMO’s report said: 

  • The capacity gap remaining when Eraring is due to close is small (250MW). 
  • The 2026-27 NSW gap (250MW) can be filled by 252 MW of 8 hour duration storage, or 477MW of solar paired with 238 MW of 4 hour duration storage. This is not an unrealistic amount of new build. The proposed Waratah Super battery to be completed in 2025 for example is well over twice this size (850MW/1680MWh).

So, NSW is in a strong position to build additional renewables and storage – or implement demand side measures – to fill the gap to ensure Eraring can close on time in August 2025. This is clear from AEMO’s ESOO as the sensitivity in which government initiatives were included gave no reliability gap in NSW.

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