High voltage transmission lines (file image)
The reliability of Australia's energy market is facing possible risks in the next decade. Image by Mick Tsikas/AAP PHOTOS
  • energy and resource

Project delays, mothballing worsen energy reliability

May 21, 2024

Meeting the electricity demands of Australian homes is set to become more difficult than previously predicted, reigniting calls for urgent energy transmission and generation investment.

With 62 per cent of Australia’s coal fleet set to close before 2033, a previous report from the Australian Energy Market Operator (AEMO) found the reliability of the national energy market will be put at risk.

Updated findings revealed on Tuesday paint an even gloomier picture.

Delays to battery projects mean energy reliability will become more risky in NSW from the summer of 2024 to 2028, mothballed generators have increased reliability risks in Victoria until 2028 and delays to another transmission line project in South Australia mean its energy reliability will be riskier in 2026.

This means in rare, extreme situations – like high-demand summer days during coal-fired generator outages, when there is no wind – wholesale electricity prices could increase, and blackouts and power outages are also possible.

The likelihood of such incidents being reduced can be managed by transmitting energy from other states or tapping into off-market reserves to match supply with demand.

But this is a short-term solution.

AEMO chief executive Daniel Westerman (file image)
 Daniel Westerman in urging immediate action to boost energy reliability. Image by Dean Lewins/AAP PHOTOS 

AEMO chief executive Daniel Westerman said the government must make urgent investments if Australia wanted to address reliability risks over the long-term.

“Australia’s energy transition is well underway,” he said.

“(But) project development and commissioning delays are impacting reliability throughout the horizon.”

Further investment in generation and transmission projects, and optimising consumer energy resources like rooftop solar will help improve reliability.

To get reliability under control for most of the next decade, state and federal governments also cannot afford to delay their announced energy programs.

Battery projects designed to replace NSW’s Eraring power station will take longer than expected to come online, increasing pressure on the state to extend the life of Australia’s largest coal-fired power station.

“There are issues in terms of supply and in terms of technical connections,” NSW Energy Minister Penny Sharpe told ABC radio on Tuesday.

Origin Energy has been in talks with the NSW government about keeping the power station open longer than its planned closure date in August 2025.

A review released last year warned of electricity shortfalls and price spikes if Eraring closes as scheduled with ministers working on a safety-net solution to head off the threat of blackouts.