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The Australian Energy Market Operator (AEMO) has released a draft of the 2024 Integrated System Plan (ISP), which outlines Australia’s most effective development pathway to reach net zero. 

In the past 18 months, AEMO has collaborated with more than 1,300 stakeholders, produced 60 presentations and reports, and considered more than 110 submissions from industry, consumer and community representatives and governments to produce the latest plan for the National Electricity Market (NEM).

AEMO CEO, Daniel Westerman, said that the plan highlights the urgency for investment to ensure that Australians can continue to have access to safe, reliable and affordable energy.

“AEMO has worked closely with industry, governments and consumer representatives to develop this plan in the interests of energy consumers,” Mr Westerman said.

“The plan maps out urgent investment so that homes and businesses continue to access reliable and affordable electricity, both in the coming decade when 90 per cent of coal generation is expected to retire, and beyond to 2050.

“As with previous reports, this plan shows that the lowest-cost pathway for secure and reliable electricity is from renewable energy, connected by transmission, supported by batteries and pumped hydro, and backed up by gas-powered generation.” 

AEMO said that it has taken a wide range of considerations into account in developing the Draft 2024 ISP. This includes government energy policies and net zero commitments, costs of electricity infrastructure, future trends in electricity consumption, consumer and grid-scale generation and storage, transmission upgrade options, and power system reliability and security needs.

The future trends are based on the ‘step change’ scenario, assessed as the most likely scenario for planning activities by AEMO based on input from a range of industry experts, government and network service provider representatives, generators and retailers, researchers, academics, and consumer advocates.

“To identify the optimal development path to 2050, we used Australia’s most comprehensive set of power system and market models to assess the benefits and risks of more than 1,000 potential pathways,” Mr Westerman said.

“Delivering the transmission projects identified in this plan is expected to avoid $17 billion in additional costs to consumers if those projects were not delivered.” 

To deliver this lowest cost pathway for secure and reliable energy, this plan calls for investment that would:

  • Add close to 10,000km of new and upgraded transmission by 2050, as highlighted in previous plans, with around a quarter underway and half to be delivered in the next decade
  • Triple grid-scale variable renewable generation by 2030 (57GW) and increase it seven-fold by 2050 (126GW)
  • Add almost four times the firming capacity from dispatchable storage, hydro and gas-powered generation by 2050 (74GW)
  • Support a four-fold increase in rooftop solar capacity by 2050 (72GW), capable of providing additional benefits to consumers if coordinated and responsive to market and operational signals

“Our updated analysis shows that Australia’s coal power stations are likely to close earlier than planned, and Australians are electrifying their homes and businesses at a faster rate. 

“In the next decade, this plan shows the need for 5,000km of transmission, both new projects and those underway, triple renewable generation and double dispatchable storage, hydro and gas-powered generation.” 

This grid-scale investment also considers growth and value from rooftop solar, batteries and electric vehicles in supporting energy reliability and the secure operation of the power system.

“While progress is being made, the transition is urgent and faces significant risks if market and policy settings, social licence and supply chain issues are not addressed.” 

With the release of the Draft 2024 ISP, the AEMO has invited all stakeholders to participate in the upcoming consultations, including public forums, and provide written submissions before 16 February 2024, after which AEMO will finalise the 2024 ISP by 28 June 2024.

Transgrid has welcomed the AEMO’s roadmap, saying that it underscores the urgent need for the accelerated delivery of its major transmission projects in New South Wales and Victoria.

Transgrid CEO, Brett Redman, said that Transgrid is getting on with the delivery of the key projects needed to realise the Federal Government’s vision for a clean energy future and that the Draft 2024 Integrated System Plan (ISP) clearly demonstrates why it needs to accelerate its efforts to achieve this transition.

“Delivering EnergyConnect, HumeLink and VNI West, which are critical components of the new roadmap, is essential if the National Electricity Market is to meet the energy needs of millions of Australians,” Mr Redman said. 

“The delivery of these projects will not only secure supply but will also provide access to cleaner, cheaper renewable energy for consumers.

“While we are delivering these projects on behalf of government, we are cognisant of the need to ensure that landowners, communities and energy consumers achieve the best possible balance of outcomes.”

Mr Redman said that Transgrid shares the bold ambition of its communities and governments to drive down energy costs and deliver a clean, sustainable and reliable energy future.

“Over the next decade, Transgrid anticipates investing more than $14 billion in New South Wales to build 2,500km of essential transmission infrastructure to connect renewable generation to the grid, so that Australian families and businesses have access to cheaper, cleaner, more reliable energy.

“We need to build the energy superhighways that will help disperse clean energy from where it is generated. To the homes, businesses and industries where it is needed.”

Industry response

Energy Networks Australia (ENA) has welcomed AEMO’s Draft 2024 ISP which shows that the grid requires significant reconfiguring as it decarbonises over the next decade, due to the rapid pace at which renewable technologies are coming online.

In the first half of 2023, renewable generation accounted for around 40 per cent of the National Electricity Market (NEM)’s delivered energy, reaching a high of 72.1 per cent momentarily on 24 October 2023.

ENA Chief Executive Officer, Dominique van den Berg, said there is an obvious and timely need to continue to deliver vital transmission projects to ensure we are connecting renewable energy and taking it from where it is generated to where it is needed.  

“The Draft 2024 ISP shows that this no regrets investment approach will strengthen the backbone of the NEM, connect renewable energy zones, enable diversity of resources and help distribution grids manage more household solar, batteries and electric vehicles,” Ms van den Berg said.

“These transmission projects are expected to pay for themselves twice over, delivering $17 billion in net market benefits. Essentially, every $1 spent on transmission projects will be paid back two-fold.”

Wind generation is expected to dominate grid scale connections which will complement consumers’ rooftop solar.  

As electricity use increases, a fourfold increase in firming capacity will be needed to meet demand and offset retiring coal generation. Firming capacity that responds to dispatch signals using utility scale batteries, hydro, coordinated Consumer Energy Resources (CER) and gas fired generation will be crucial to keeping the lights on.

CER (like rooftop solar and home batteries) are expected to play an even larger part in the transition, with a fourfold increase in rooftop capacity to 72GW expected by 2050. 

Gas, or renewable gas, will be needed for the firming of power supply through the transition.

“When it comes to the grid, we are at the cusp of a once in a generation rebuild, which is not without challenges. The role of transmission and distributions networks to facilitate great outcomes for customers through the transition, and well beyond, is critical.

“Our members, Australia’s transmission and distribution networks, are acutely aware of the significance of their role in getting the transition right, and this ISP acknowledges the transformative work they are doing to secure reliable and renewable electricity for customers now, and for future generations.

“The energy transition is well underway, and we need to keep moving forward, ensuring industry and governments work together to deliver policy that shapes our future and supports a least-cost transition for Australia,” Ms van den Berg said.

Hydro Tasmania also welcomed the draft ISP, confirming the need for urgent delivery of new energy infrastructure including the Marinus Link interconnector to further connect Tasmania to Victoria.

Hydro Tasmania Chief Executive Officer, Ian Brooksbank, said the ISP from AEMO clearly called out that as coal generation exits at a rapid pace, the lowest cost way to supply electricity is renewable energy, connected by transmission and firmed with storage.

“AEMO predicts the need for a four-fold increase in firming capacity to smooth the variability of increasing amounts of variable generation.

“Pumped hydro and hydropower will be a critical part of that, and Tasmania can play that firming role,” Mr Brooksbank said.

Battery of the Nation and Marinus Link are fundamental to meeting Tasmania’s growing demand for clean energy and will play an important role in Australia’s decarbonisation and ensuring reliable supply.

“These critical projects must progress. It’s great to see AEMO recognising the role Marinus Link will play in unlocking the cost-effective clean energy and long-duration storage Tasmania can provide,” Mr Brooksbank said.

“We need new renewable generation, long-duration storage and more interconnection and transmission to meet Tasmania’s and Australia’s future energy needs.”

Redeveloping the iconic Tarraleah hydropower scheme and developing pumped hydro at Lake Cethana are the flagship projects for Battery of the Nation.

“These projects will deliver local jobs, economic growth, more clean energy and energy security for our state.

“They will help put downward pressure on energy prices and provide reliability to a national electricity market that will be increasingly dominated by wind and solar on the pathway to net zero by 2050,” Mr Brooksbank said.

Marinus Link said that the report reaffirmed Marinus Link as an urgent transmission project as part of the lowest-cost pathway to Australia’s net-zero emissions targets.

Marinus is classified as a priority investment and ‘actionable’ in the Draft 2024 ISP, which maps the optimal path for transmission developments in the NEM.

The report notes actionable projects must be delivered urgently to provide the best outcomes in energy security, reliability and affordability for homes and businesses.

Marinus Link Chief Executive Officer Caroline Wykamp, said the report showed that Marinus and Tasmania’s energy potential remained a key part of the national energy plan.

“Under a range of future scenarios and sensitivities, Marinus will always be needed to keep the lights on and grow our economies in the coming decades,” Ms Wykamp said.

“It’s not just electricity – Marinus also includes a data cable that will improve internet connectivity between Tasmania and Victoria.”

AEMO is responsible for operating Australia’s NEM in the best interests of Australian energy consumers.

The ISP considers government energy policies and net-zero commitments, costs of electricity infrastructure, future trends in electricity consumption, consumer and grid-scale generation and storage, transmission upgrade options, and power system reliability and security needs.

The ISP identified that consumers are expected to avoid $17 billion in additional costs if actionable and future transmission projects, including Marinus, are delivered.

“Despite rising investment costs for all planned transmission projects, Marinus still delivers significant net economic benefits to Australians and is critical to the future energy system,” Ms Wykamp said.

The updated third-party economic analysis by Ernst & Young is now publicly available. This report details the remodelled job and economic figures for both stages of Marinus Link.

Marinus Link Chief Commercial Officer, Prajit Parameswar, said the updated Ernst & Young analysis and AEMO’s ISP demonstrated the continued strength of the Marinus business case.

“With consideration of the project’s remodelled scope and costs, Ernst & Young’s report reveals an increase in both jobs and economic growth,” Mr Parameswar said.

“Stage one alone will support 1,400 direct and indirect jobs per year in Tasmania during peak construction, and 1,000 direct and indirect jobs per year in Victoria during the same time period.

“Marinus Link is expected to contribute $1.4 billion of economic stimulus to Tasmania and $1 billion to Victoria – and these numbers only increase with stage two,”  Mr Parameswar said.

©2024 Utility Magazine. All rights reserved

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