Power demand seen doubling under Australian EMO's integrated system plan

Australian Energy Market Operator (AEMO) foresees electricity demand doubling under its latest long-term Integrated System Plan, which maps routes to net zero emissions by 2050 for the National Electricity Market (NEM) in eastern and south-eastern Australia.

The June 30 plan comes at a time of turmoil in the power market, AEMO suspending the day-ahead market earlier in the month as wholesale prices rocketed.

"Australia is experiencing a complex, rapid and irreversible energy transformation," Daniel Westerman, CEO of AEMO said.

"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," he said.

Transmission projects under the ISP's optimal development plan are forecast to deliver A$28 billion ($19 billion) in net market benefits at a cost of A$12.7 billion, or 7% of forecast generation, storage and network investment in the national power market, Westerman said.

AEMO identified its "Step Change" scenario as the most likely of four presented in the report.

Under Step Change, renewables' share of annual generation rises from 28% in 2020-21 to 83% in 2030-31 (consistent with the government policy), then to 96% by 2040 and 98% by 2050.

Meanwhile 60% of current coal capacity exits the market by 2030 under Step Change.

"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.

Five key grid projects

The report refers to an "optimal development path" under which five grid projects are immediately actionable in eastern and south-eastern networks, namely: 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," the plan said.

Step Change contrasts with a "Hydrogen Superpower" scenario, meanwhile, where "the needs of proposed hydrogen production to export our abundant renewable energy potential, if supplied from the grid, would be additional to this growth [in power demand]," the plan said.

To reach Australia's full storage and export potential under Hydrogen Superpower, the NEM would have to deliver eight times current production, it said.

The NEM delivers around 180 TWh/yr. Under an optimal development path, the plan assumes this will rise to 320 TWh/yr by 2050.

Both Step Change and Hydrogen Superpower move close to or achieve net zero emissions by 2035.

Australia's GHG emissions were estimated at 488 million mt in 2021, up 0.8% year on year.

Australia's energy-related climate emissions of 377 million mt in 2021 are set to rise to 393 million mt in 2025 and 394 million mt in 2030 under a reference case produced by S&P Global Commodity Insights' Global Integrated Energy Model.

"Guided by AEMO, the Clean Energy Finance Corporation and my department, Rewiring the Nation (Labor Party Plan) will enable the new government to get on with the job and implement the ISP," Climate Change and Energy Minister Chris Bowen said June 29.

Day-ahead power for New South Wales averaged A$388.37/MWh for delivery July 1, down from a record high of A$838.77/MWh June 13, AEMO data showed.

AEMO suspended the spot market for wholesale electricity June 15 and lifted the suspension in all regions June 24.

AUSTRALIA: SCENARIO INPUT ASSUMPTIONS (TWh)

Source: AEMO, Integrated System Plan 2022