Australia’s main electricity grid will probably avoid major supply shortages next summer but risks escalate in later years as ageing coal plants exit potentially faster than new renewables and storage projects come on line.
The projections are contained in the Australian Energy Market Operator’s updated Electricity Statement of Opportunities report, released on Tuesday.
The revision was triggered by several changes in project timings including delays of at least a year for Snowy Hydro’s giant pumped hydro project, Snowy 2.0, and its gas/hydrogen plant at Kurri Kurri in NSW.
New gas, wind and battery projects forestalled previously predicted supply gaps in South Australia in 2023-24 and Victoria in the following year. But so-called reliability gaps could emerge from 2025 onwards with a handful of coal-fired power stations dropping out of the national electricity market.
“These gaps widen until all mainland states in the Nem are forecast to breach the reliability standard from 2027 onwards, with at least five coal power stations totalling approximately 13% of the Nem’s total capacity expected to retire,” said Aemo’s chief executive, Daniel Westerman.
“Urgent and ongoing investment in renewable energy, long-duration storage and transmission is needed to reliably meet demand from Australian homes and businesses.”
Another relatively mild summer in 2022-23 has helped generators avoid a repeat of last winter’s shortages.
Still, the cooler conditions in eastern Australia linked to three La Niña years that have moderated electricity demand may soon give way to another El Niño, climate models indicate. El Niños are typically marked by increased prevalence of heatwaves, bushfires and droughts, all potentially challenging for the power grid.
Such discussions may well feature at a meeting of climate and energy ministers from around Australia planned for this Friday in Newcastle in NSW’s Hunter Valley. The first such gathering of the year will probably get a market update, with projects in the Hunter region prominent in the Aemo report.
For instance, the remaining three units of AGL Energy’s 1680-megawatt Liddell coal-fired power station are scheduled to close by the end of next month.
The supply gap was meant to have been filled in part by the completion of Snowy Hydro’s 660MW Kurri Kurri gas plant, also in the Hunter Valley. Production will be delayed until the end of 2024, Aemo now says, citing Snowy’s updated forecasts.
New South Wales’ – and Australia’s – largest coal-fired plant, Origin Energy’s Eraring, is presently predicted by the company to close in 2025. The Aemo report “considers” as committed the NSW government’s 700 MW/1400MW-hour Waratah Super Battery to make up for some of that shortfall from 2025-26 even though finally approval is still pending from the Australian Energy Regulator.
“The Waratah Super Battery means NSW will meet the national reliability standard after the potential closure of Eraring in 2025,” said Matt Kean, NSW’s energy minister and treasurer. “In addition to the Waratah Super Battery, NSW is issuing a tender for 380MW for firming infrastructure to further improve reliability.”
The reliability of Queensland’s grid hinges in part on the performance of NSW, given the interconnections between the two states. Queensland also has its energy challenges with the 800MW-plus Callide C plant now expected to be offline until at least 30 June, after a cooling tower collapsed last October, Aemo’s report said.
The addition of 461MW of batteries and 1326MW of windfarms across the Nem helped reduce the risk of reliability gaps compared with earlier Aemo forecasts. More such projects will probably ease the threats.
“The Nem has a strong pipeline of proposed generation and storage projects, totalling three times today’s generation capacity, with large-scale solar, wind and batteries accounting for 86%,” Westerman said. “Investment in firming generation, such as pumped hydro, gas and long-duration batteries, is critical to complement our growing fleet of weather-dependent renewable generation to meet electricity demand without coal generation.”
Other developments that may reduce the forecast reliability risk include the HumeLink, intended to connect Snowy 2.0 to the Sydney market and Victoria’s counterpart, the VNI West link. The Victoria government announced on Monday it was speeding up work on VNI West.
Queensland’s 520MW/90 MWh battery projects and 542MW/660MWh of such projects in South Australia, are among ventures in the works, Aemo said.