Changing outlook for electricity supply

The Australian Energy Market Operator’s (AEMO) 2015 Electricity Statement of Opportunities (ESOO) reports industry intends to withdraw
approximately 4550MW of generation capacity across the National Electricity Market (NEM) in the next 10 years. AEMO managing director and chief executive officer Matt Zema said most of these withdrawals are planned for New South Wales and South Australia, which could lead to a greater reliance on interconnectors to supply electricity to these states.

“Long-term outcomes modelled in the ESOO are based on current conditions and capacity changes reported by industry,” Mr Zema said.

“Should today’s market conditions continue, previously projected surpluses in all regions will reduce as these withdrawals place greater reliance on imports from other regions. This means under a medium demand scenario, NSW, SA and Victoria may be at risk of breaching the NEM Reliability Standard at various points in the next decade.” The 2015 ESOO uses current information provided by industry to report on the adequacy of existing and committed electricity supply in the NEM to meet the maximum demand and annual consumption forecasts detailed in AEMO’s 2015 National Electricity Forecasting Report from 2015-16 to 2024-25.

Supply adequacy is tested under three demand scenarios – high, medium, and low – to identify Low Reserve Condition (LRC) points. The LRC points indicate whether any regions are at risk of breaching the NEM Reliability Standard, which targets less than 0.002 per cent of unserved energy for each financial year.

“A lot has changed in 12 months, not least within the energy industry which continues to undergo a rapid transformation. This time last year, industry was reporting a projected surplus generation capacity of 7400MW across the NEM in the next 10 years,” Mr Zema said.

“The 2015 ESOO shows the market outlook continues to adjust and adapt in response to the rapid rate of change impacting the energy industry.

“And we expect an efficient market will continue to adjust and respond appropriately to this latest information.” AEMO is also tracking 21,689MW of proposed new generation capacity. This includes 55.4 per cent (12,021MW) wind, 27.9 per cent (6040MW) gas, 9.2 per cent (2000MW) coal, 1.3 per cent (287MW) solar, 3.1 per cent (666MW) water and 3.1 per cent (676MW) other generation.