• AEMO’s updated ISP document models an overt doubling of electricity demand for 2050
  • Five ‘immediately actionable’ transmission projects flagged to enable the renewable energy replacement of coal
  • Some 10,000km of new transmission lines needed to link up a nine-fold expansion of wind and solar farm capacity by 2050


Updated biennially by the Australian Market Operator (AEMO), the much-anticipated Integrated System Plan released today presents a framework for the development of the National Electricity Market (NEM) over the next 30 years.

As it has since 2018, AEMO has involved more than 1,500 stakeholders – including policy makers, governments, consumers, and energy industry representatives – to develop the June 2022 ISP, based on rigorous economic and engineering analysis

In its latest version, the AEMO says the plan is for a “true transformation” of the NEM from fossil fuels to firmed renewables, emphasising the need for investment in generation, storage, transmission, and system services that exceed all previous efforts.

Speaking with Stockhead, Energy market analyst and absolute green-hearted legend Tim Buckley said this critically important document details the no regret decisions needed today that should have been put forth years ago.

“The number one point that is detailed, which is different to last year’s plan is the inevitable delays in major projects due in part to inflationary pressures but probably more so, the lack of capacity and skills,” the co-founder and ex managing director of Arkx Investment Management said.

“It models an overt doubling of electricity demand for 2050 and while it may not be perfect, signifies there is no better time than today to make these decisions and put in place the grid architecture for modernisation.”


Transmission focus to replace exiting coal generation

The 2022 ISP is based on an ‘optimal development path’ of essential transmission projects, which are forecast to deliver $28 billion in net market benefits, which represents just 7% of the total generation, storage, and network investment in the NEM.

AEMO’s suddenly everywhere CEO Daniel Westermann said transmission investments will enable low-cost, firmed renewable energy to replace exiting coal generation and highlight five ‘immediately actionable’ projects.

These include: HumeLink, VNI West, Marinus Link, Sydney Ring and New England REZ Transmission Link, with the plan suggesting at least 10,000km of new transmission lines to link up a nine-fold expansion of wind and solar farm capacity by 2050.

To support the rapid expansion of energy sources, Westermann warned the grid will also need to triple the amount of firming capacity – such as dispatchable storage, hydro, and gas fired generation – if we’re serious about getting and staying juiced.

“We’ve recently seen market dynamics exhibiting the step change scenario, including accelerated coal-fired power station closures. In addition, generation unavailability and high commodity prices further highlight the need to invest in the transmission plan outlined in the ISP to support firmed renewables,” Westerman said.



All coal-fired generation to exit stage left by 2043

The ISP paints a future offering four main scenarios, with the most likely scenario being the Step Change plan which predicts all coal-fired power plants to exit the market by 2043.

It assumes the grid will lose 14GW of coal plants by 2030, or 60% of the 23GW still in the national electricity market.

The report says, “coal plant owners have yet announced only 8.4GW in withdrawals”, which – as reported by The Guardian – implies further withdrawals amounting to double the size of Australia’s biggest plant – Origin’s Eraring – are still to be announced.

Above all else, AEMO makes it clear that investment in low-cost renewable energy, firming resources and essential transmission remains the best strategy to deliver affordable and reliable energy, protected against international market shocks.

Keep an eye out for Stockhead’s own elegant energy investigator Mr Bevis Yeo’s take on all this crazy business, tomorrow morning, same time, same domain address…