Transmission planning for the NEM

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The Australian Energy Market Operator’s (AEMO) 2016 National Transmission Network Development Plan (NTNDP) illustrates the need for transmission networks to adapt in order to maintain a reliable, secure power system.

AEMO Chief Operating Officer, Mike Cleary, said, “Transmission networks, historically designed for transporting energy from traditional coal and gas generation centres, will be asked to support large-scale renewable generation and be increasingly needed for system support services, such as frequency and voltage support to maintain a reliable supply.”

AEMO’s assessment of options for national transmission grid development finds potential value in developing a more interconnected National Electricity Market (NEM) over the next 20 years to remove network congestion, lower the overall cost of generation dispatched to consumers, and improve the power system’s resilience to unexpected events.

“While noting that there may be many different combinations of strategies to meet future balancing requirements, AEMO’s NTNDP modelling reveals positive net benefits for potential transmission developments to help facilitate the diversity of the future generation mix and to improve system resilience,” Mr Cleary said.

Combining all of the potential developments outlined in the NTNDP, it illustrates a positive net benefit of up to $300 million. The modelling shows an interconnected NEM capturing greater benefits for consumers and highlights the need for coordinated planning across regions when assessing the efficiencies of these options.

“The NTNDP highlights the need for co-ordination and contestability to maximise the benefits of transmission investments across the NEM and ultimately for consumers, making transmission development competitively priced, reducing the costs for consumers, and increasing the benefits and efficiencies further,” Mr Cleary said.

The NTNDP also notes that interconnection does not necessarily solve all challenges and local, smaller-scale solutions involving network and non-network options will also be required to maintain a reliable supply.

While AEMO considers the flat expectations for grid demand in its ‘neutral scenario’ as the most likely, a range of uncertainties such as the economic outlook for electricity intensive industries and consumer investment trends point towards demand potentially being materially lower than current expectations.

There are further uncertainties in supply as the transforming generation mix largely depends on the timing of coal generation retirements and what type of new generation replaces coal.

“Unless alternative technologies can commercially provide the energy and system stability services delivered by coal generation, up to 12GW of new gas-powered generation (GPG) may be required to support intermittent renewable generation,” said Mr Cleary.

AEMO acknowledged that transmission investment is costly and can take time to plan and build. Comprehensive Regulatory Investment Test for Transmission (RIT-T) assessments will examine the full range of potential solutions, including a mix of smaller scale and non-network solutions such as synchronous condensers, energy storage and demand response technologies.

“Given the range of potential developments in consideration, and the interdependencies between them, a coordinated, national approach to plan for the energy transformation is imperative to enable optimal solutions to be implemented in the long-term interest of NEM consumers,” said Mr Cleary.

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