The Australian Energy Market Operator (AEMO) has published the Draft 2026 Integrated System Plan (ISP) for consultation.
Developed under the National Electricity Rules, the ISP presents the least-cost roadmap for generation, storage, and transmission infrastructure in the National Electricity Market (NEM) to supply secure and reliable electricity, and meet government policies to 2050.
AEMO CEO Daniel Westerman said this year’s roadmap was consistent with previous reports, reflecting investments and momentum underway as Australia transitions away from coal generation.
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“Extensive stakeholder consultation and modelling of thousands of potential investment combinations has identified the least-cost option,” Westerman said.
“Renewable energy, firmed with storage, backed up by gas and connected with upgraded networks remains the least cost roadmap to meet Australia’s energy needs. This aligns with consumer, industry and government investments already underway.”
The Draft 2026 ISP reveals electricity consumption is expected to nearly double by 2050, driven by electrification of transport, expansion of data centres and industry shifting from gas to electricity. At the same time, two-thirds of the remaining coal fleet would close by 2035, in many cases earlier than publicly announced closure dates, with all due to retire by 2049.
To deliver the least-cost optimal development path (ODP) proposed in this draft by 2050, the NEM would need a total of 120GW of grid-scale wind and solar, 32GW grid-scale batteries, 14GW of flexible gas and 12GW of pumped hydro. A further 6,000km of new transmission lines, the backbone of the electricity system, would need to be added to the existing 44,000km network.
The annualised total capital cost of grid-scale generation, storage, transmission and distribution in the ODP would be $128 billion in today’s dollars. Transmission investments alone, around $9 billion, are expected to repay their costs, save consumers an additional $22 billion in avoided costs and deliver emissions reductions valued at $2 billion.
Consumers will continue to play a major part in Australia’s energy transition, with expected investment in 87GW of small-scale solar, 27GW of behind-the-meter batteries and 9GW of storage from electric vehicles by 2050.
“Australian consumers are world leaders in rooftop solar and are now adding home batteries and electric vehicles. If those consumer devices can respond to market signals through their retailers, it will result in a lower cost power system for everyone,” Westerman said.
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As part of its analysis, AEMO has undertaken a constrained delivery sensitivity to ensure the transmission investments identified in the ISP are still beneficial under a scenario where various factors may impact delivery.
“While momentum in investment and delivery continues to build, challenges remain in delivering essential infrastructure at the pace required. Slower progress will erode benefits to consumers and present risks to reliability,” Westerman said.
AEMO is welcoming feedback on the Draft 2026 ISP ahead of the final 2026 ISP in June next year.
