East coast power shortages on the cards without new projects: AEMO

“Eraring may need to play an important capacity role,” analysts at investment bank Macquarie said last week.

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As the clean energy transition gathers pace, the roll-out of large-scale wind and solar farms coupled with Australians’ booming uptake of rooftop solar panels have been radically reshaping the market and squeezing out fossil fuels.

Renewable energy generation hit a record high in the final three months of 2022, supplying on average 40 per cent of the grid’s power during quarter, beating the previous record of 35 per cent set in the same period of the prior year.

Because electricity production is a dominant source of Australia’s emissions, reducing output from coal plants will help sharply reduce the national carbon footprint and help reach the federal government’s commitment to cut national greenhouse gas emissions by 42 per cent by 2030.

The Albanese government’s commitment includes a target for the grid to source 82 per cent of its power from renewable sources this decade, and is being supported by a $20 billion “Rewiring the Nation” fund to modernise the grid and develop new transmission lines to better-enable the flow of energy around the country and bolster reliability.

However, AEMO is becoming increasingly concerned about the slow roll-out of new “firming” generation such as pumped hydro, gas and long-duration batteries, which will be vital to supporting renewable energy and preventing blackouts when the wind isn’t blowing and the sun isn’t shining.

“Investment in firming generation … is critical to complement our growing fleet of weather dependent renewable generation to meet electricity demand without coal generation,” Westerman said.

The calls for new gas-fired power generation to shore up the grid could add to the political challenge for Labor, which depends on support from the Greens to pass its new industrial emissions-reduction policy, known as the safeguard mechanism. The Greens have been pressuring Labor to commit to stopping new gas fields as a condition of their support.

Australia narrowly averted blackouts last year as several coal-fired stations suffered unexpected breakdowns and others withdrew supplies, at the same time as gas-fired generators faced soaring fuel prices due to the fallout from the war in Ukraine.

Tony Wood, energy director at the Grattan Institute, a prominent policy think tank, said there were potentially significant gaps emerging in the market, but noted that there was also a large disparity between new projects that “may” come online and projects that were far-enough advanced to be deemed committed by AEMO.

Of 209 gigawatts of new projects, just 10 gigawatts is considered committed.

“The piece that makes it difficult is whether these projects are ‘possibles’ but not ‘probables’ and what the likelihood is of these things going ahead?” Wood said.

“Calling it a wake-up call is probably strong, but there are some big gaps emerging here … and there are lots of possibilities.”

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