Eraring, the nation’s biggest coal-fired power station, may need to delay its closure to ease blackout threats in New South Wales, while other eastern states also face “periods of high risk” because of the slow rollout of renewables, the Australian Energy Market Operator warns.
In an unusual update of its Electricity Statement of Opportunities report, Aemo forecast so-called reliability gaps in NSW, Queensland, South Australia and Victoria unless authorities “orchestrated” faster deployment of solar and wind energy as well as batteries.
“While new generation and storage capacity continues to increase, project development and commissioning delays are impacting reliability throughout the horizon,” Aemo’s chief executive, Daniel Westerman, said.
The assessment only considered existing, committed and anticipated projects. It omitted federal or state government programs and projects in the pipeline totalling 280 gigawatts – or 4.5 times the present national electricity market’s capacity.
The identified reliability risks were higher in coming years than the “central scenario” detailed in the report’s initial forecasts last October. For NSW and Victoria, risks were higher in the 2024-25 to 2027-28 years, and in 2026-27 for South Australia.
Battery project delays may cause periods of scarcity in the summer supply after the August 2025 scheduled exit of Origin Energy’s 2.88GW Eraring plant, Aemo said.
Origin and the NSW government say negotiations over Eraring continue. A decision to extend its operations for several years is expected soon although some experts say the likely cost of hundreds of millions of dollars could be better spent elsewhere and millions of tonnes of carbon dioxide pollution avoided.
Still, the Aemo report will probably bolster the case to extend the lower Hunter Valley plant. NSW has faced regular “lack of reserve” alerts on the grid because of relatively cloudy or calm days and unplanned coal outages. The latter included at least one of Eraring’s four units for more than a fortnight.
Penny Sharpe, NSW’s energy minister, declined to comment on the state of talks with Origin.
“The [electricity statement of opportunities] report shows the risk of energy reliability gaps over the next three years has increased in NSW,” Sharpe said.
“This confirms that there are risks associated with new projects being delayed and reinforces the need for the action that the NSW government is taking to support more renewables, deliver critical transmission infrastructure and speed up the connection of big batteries to the grid.”
The federal energy minister, Chris Bowen, said the updated report revealed a “dramatically improved outlook on reliability” even before its capacity investment scheme to fast-track 32GW of new generation and storage projects was included.
“There are projects scheduled to commence operating and meet energy demand this summer,” Bowen said. “With Aemo procuring interim reserves we can be confident of ongoing reliability across higher demand periods, even if anticipated projects are delayed.”
Aemo said it would tender for reliability reserves in NSW and Victoria to “minimise reliability risks should low reserve conditions emerge over summer 2024-25”.
For NSW, these would cover working weekdays from 3pm to 8pm for that summer, and total 270 megawatts to fill the gap. For Victoria, the reserves would cover 4pm to 8pm for working weekdays in January and February 2025 with an estimated gap of 245MW.
The tendered reserves would rise in both states in following years, particularly in NSW. The latter envisages a shortfall of as much as 1.23GW – assuming Eraring shuts as scheduled – with June and July also needing to be covered.
Aemo tendered for reliability reserves in Victoria and SA last summer but no megawatts of supply were needed.
Grid reliability is considered to be breached unless electricity is available in a region for 99.9994% of a given year. After 2028-29, the reliability standard eases slightly to requiring power to be available for 99.998% of any year.
For Victoria, the reliability risks were heightened because of generators being mothballed in SA and transmission limitations affecting flows into Melbourne.
SA’s risks increase because of a delay in stage two of its Project EnergyConnect transmission link to NSW and earlier delays to output from the Torrens Island B and Osborne power stations.
For Queensland, Aemo forecasts reliability risks to remain within the relevant standard until 2031-32, an improved outlook since its 2023 Electricity Statement of Opportunity report.
