The Australian Energy Market Operator (AEMO) has published the 2022 Integrated System Plan (ISP), outlining a 30-year roadmap of investments for the National Electricity Market (NEM).
AEMO has involved more than 1,500 stakeholders—including policy makers, governments, consumers and energy industry representatives—to produce its third ISP, based on rigorous economic and engineering analysis.
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AEMO CEO Daniel Westerman said, “Australia is experiencing a complex, rapid and irreversible energy transformation.”
“The 2022 ISP informs Australia’s energy transformation, based on an ‘optimal development path’ of essential transmission investments that will efficiently enable low-cost, firmed renewable energy to replace exiting coal generation.
“These transmission projects are forecast to deliver $28 billion in net market benefits, returning 2.2 times their cost of $12.7 billion, which represents just 7 per cent of the total generation, storage and network investment in the NEM,” he said.
The ODP identifies five projects as immediately actionable which should progress as urgently as possible: HumeLink, VNI West, Marinus Link, Sydney Ring and New England REZ Transmission Link. While delivery dates are as advised by project proponents, earlier delivery would provide valuable insurance for any faster transition or additional benefits to consumers.
As part of developing the ISP AEMO and stakeholders identified the most likely future for the NEM, called the ‘step change’ scenario, having considered ageing generation plants, technical innovation, economics, government policies, energy security and consumer choice.
“The step change scenario forecasts annual electricity consumption from the grid will double by 2050, as transport, heating, cooking and industrial processes are electrified and 60 per cent of current coal generation exiting by 2030,” Westerman said.
“To maintain a secure, reliable and affordable electricity supply for consumers through this transition to 2050, investment is required for a nine-fold increase in grid-scale wind and solar capacity, triple the firming capacity (dispatchable storage, hydro and gas-fired generation) and a near five-fold increase in distributed solar,” he said.
Westerman said the need to cost-effectively deliver the investment in firmed renewables had gathered momentum in recent months.
“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.
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“The ISP will help industry participants, investors, governments and communities plan for the decarbonisation of the power system to deliver low-cost, firmed renewable electricity with reliability and security.
“Importantly, the ISP will help meet state and national climate targets, and contribute to economic growth through low-cost, reliable energy,” he said.
