The capacity of Australia’s main electricity grid will need to triple by 2050 – including a fivefold expansion of large-scale wind, solar and storage – under the most likely development path, the national energy market operator says.
The estimate is included in the Australian Energy Market Operator (Aemo) draft “integrated system plan” for the national electricity market, the power grid that connects the five eastern states and the ACT.
Aemo found renewables would continue to replace coal as the grid’s “bulk generation”, and total electricity consumption would nearly double over the next 25 years as industry, homes and cars increasingly ran on electricity and the number of datacentres expanded.
It suggested the capital cost of the energy grid infrastructure under the optimal path would be $128bn in today’s dollars. It said the transition would be more expensive if it was delayed and the Albanese government’s 2030 renewable energy target – 82% of generation – was not met.
Renewable energy has provided nearly 43% of generation over the past year, and 50% over the past month. But experts, including the Climate Change Authority, have warned the pace of the growth in renewables needs to more than double for the 2030 goal to be reached.
Aemo reduced its assessment of how much new transmission was likely to be needed compared with its last assessment two years ago, down from about 8,000km to 6,000km, in part due to the Queensland Liberal National party government cancelling a major pumped hydro development.
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It estimated the transmission expansion would cost about $9bn, but would save consumers $22bn and deliver $2bn worth of emissions cuts, compared with a path that did not include new transmission.
Rooftop solar – already on more than 4m Australian homes and businesses – would continue to expand and make up a growing proportion of generation. Aemo said the number of small solar systems would need to increase fourfold by 2050.
It said two-thirds of the remaining coal-fired power capacity was likely to shut over the next decade, with many plants likely to shutter before their announced closure dates. The remainder would close by 2049 – 11 years later than previously forecast – reflecting a contentious Queensland government decision to extend the life of its polluting fleet.
The coal plants that remained in the system were increasingly likely to have their operation ramped up and down – something they have traditionally not been able to do – as cheap solar generation dominated the grid in the sunniest parts of the day.
New gas-fired power plants would be needed to replace ageing generators and to expand gas capacity by 25%. But Aemo said the plants would be rarely used. A typical gas plant may run at about 7% of its annual potential. It would be deployed as backup, mostly in winter when shorter days reduced solar output and more electricity was needed at night for heating.
Aemo’s chief executive, Daniel Westerman, said “renewable energy, firmed with storage, backed up by gas and connected with upgraded networks” remained the least-cost path to meet Australia’s energy needs.
But he said there were challenges in delivering the infrastructure needed “at the pace required”.
“Slower progress will erode benefits to consumers and present risks to reliability,” he said.
David McElrea from the Smart Energy Council, which represents renewable energy businesses, said the message from the draft plan was simple.
“The more we delay, the more we pay,” he said.
