120 gigawatts of wind and solar, 32 GW grid-scale batteries and 14 GW of flexible gas along with 6,000 km of new transmission lines. It’s all part of a $128 billion proposed investment needed to meet 2050 targets, the energy market regulator has found.
The Australian Energy Market Operator published its Draft 2026 Integrated System Plan (ISP) with an aim to establish the lowest cost plan for generation, storage and transmission infrastructure in the National Electricity Market (NEM) to supply secure and reliable electricity, and meet government policies by 2050.
The AEMO says it has shaped a plan in consultation with industry and other stakeholders that balances consumer needs, industry investment and government policy.
AEMO CEO Daniel Westerman said the roadmap reflects investments and momentum underway, and what’s needed as Australia’s remaining coal power stations become less reliable and withdraw.
“Extensive stakeholder consultation and modelling of thousands of potential investment combinations has identified the least-cost option,” Mr 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,” he said.
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.
It predicts 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.
The least-cost optimal development path proposed includes adding a total of 120 gigawatts (GW) of grid-scale wind and solar, 32 GW grid-scale batteries, 14 GW of flexible gas and 12 GW of pumped hydro.
6,000 km of new transmission lines, will also need to be added to the existing 44,000 km network.
The report noted these transmission investments of 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.
The AEMO says roof top solar and home batteries would continue to play a big part with an expected growth of 87 GW of small-scale solar, 27 GW of behind-the-meter batteries and 9 GW 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,” Mr Westerman said.
Mr Westerman notes that the momentum for investment must continue to lower risk and reduce potential increased costs to consumers
“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,” Mr Westerman said.
Reactions
The energy sector was quick to respond with many affirming the need for investment in new transmission infrastructure to provide consumers access to lower cost energy.
Energy Networks Australia has said the plan highlights the importance of the networks in the transition but that it has also “right-sized the task ahead”.
It notes the report has decreased earlier speculations that up to 10,000 kilometres of new transmission lines would be needed by 2050 to a target of 6000km.
The ENA notes that of this new target almost half, about 2,800 kilometres in projects, is already underway.
Energy Networks Australia CEO Dom van den Berg said the Draft ISP brings welcome clarity to the national conversation about networks.
“The ISP makes clear that networks are not an optional add-on – they are the backbone that allows new generation, storage and customer-owned resources to operate as a reliable, integrated system,” Ms van den Berg said.
“It also confirms that transmission investment represents around seven per cent of the future capital cost of the energy transition, while delivering substantial whole-of-system benefits for consumers.”
Ms van den Berg said the ISP appropriately highlights the need for the entire sector to remain focused on total system costs, not individual components in isolation.
“Industry, policy makers and regulators must stay eyes-wide-open on the affordability challenge and work together to keep costs down across the whole system,” she said.
The Draft ISP also begins to more fully recognise the role of distribution networks in enabling the transition, including through innovative approaches that reduce the need for transmission investment.
Investment call
Transgrid CEO Brett Redman said major transmission projects remain critical as NSW enters the ‘deep transition’, which will take the state from 40% to 90% renewables over the next decade.
“Old coal-fired generators are closing and we need to ensure new clean generation can connect efficiently to the grid.
“AEMO has confirmed the vital role of new transmission infrastructure in putting downward pressure on consumers’ energy bills, by moving renewable energy from high-resource areas to the industries, cities and towns that need it,” he said.
“Transgrid is committed to delivering the major transmission investments that will unlock these benefits for NSW consumers, such as the nation-critical EnergyConnect interconnector – one of the first committed projects in the ISP – which has now achieved 95% construction completion.
“When it is commissioned next year, EnergyConnect will increase renewable energy sharing between NSW, Victoria and South Australia, adding reliability and stability to electricity supply across the National Energy Market and enabling consumers to access the lowest cost generation available.
“In addition, we have commenced construction on the nation-building HumeLink project, which will unlock the full capacity of Snowy 2.0 and other new renewable energy generators.”
Transgrid’s EnergyConnect and HumeLink are among seven transmission projects identified as committed and anticipated, while Sydney South Ring, Sydney North Ring (Hunter Transmission Project), VNI West and QNI Connect have been maintained as actionable.
Mr Redman welcomed the first ever inclusion of distribution network investments such as the Dubbo distribution project, which will export generation and storage to supply the Sydney, Newcastle and Wollongong load centres.
“The entire industry must work together if NSW is to best navigate the next phase of its transition from coal power to renewables,” he said.
“Transgrid also welcomes AEMO’s emphasis on the need for cooperative action on social licence issues to nurture trust with regional communities.
“Early and genuine engagement with communities is critical to the efficient planning and delivery of infrastructure investment over the next decade.”
Big projects with big reductions
The joint proponents of Project Marinus – Marinus Link Pty Ltd (MLPL) and TasNetworks also welcomed the ISP affirmation that renewable energy, connected by transmission and distribution investment presented the least-cost way to supply secure and reliable electricity to consumers through to 2050
It is forecast to save consumers $22 billion in avoided costs and deliver emissions reductions valued at $2 billion.
Project Marinus Stage 1 says the undersea cable connecting Victoria and Tasmania is among three projects that have advanced since the 2024 ISP to now be listed as committed and anticipated transmission projects the report notes.
Marinus Link Pty Ltd CEO Stephanie McGregor said the report recognises the pivotal year of progress on Marinus Link and reaffirms the project’s value to consumers.
“Marinus Link Stage 1 is now fully funded, we have primary Commonwealth and Victorian environmental approvals, a draft regulatory decision and almost all major contracts in place,” Ms McGregor said.
Marinus Link is essential infrastructure for grid reliability, resilience, and the efficient use of energy resources, which ultimately flows through to consumers,” she said.
“With Marinus Link in place, Tasmania and Victoria can share much more electricity, pairing Victoria’s wind and solar with Tasmania’s flexible hydropower system and geographically diverse wind.
TasNetworks CEO, Seán McGoldrick, pointed to AEMO’s recent Transition Plan for System Security, which concludes the switch to clean energy will bring power prices down over the next five years, but they’ll drift higher in the 2030s unless clean energy rolls out quickly enough.
“We have a duty to start building NWTD early next year for Tasmanians who want and need the lowest possible future prices,” Dr Mc Goldrick said.
“Simple supply and demand: abundant energy equals lower prices. And we can only have abundant clean energy with transmission projects like NWTD, which carry necessary up-front cost.
The report also listed Project Marinus Stage 2 as likely to remain actionable, a signal of the project’s important and ongoing role in providing a secure and stable energy grid.
The Draft ISP will be open for consultation, ahead of the final 2026 ISP to be released in June next year.
