AEMO Warns Power Supply At Risk Despite 5.7GW Boost From New Projects Amid Coal, Gas Plant Closures

The addition of 5.7 gigawatts from new generation and storage projects have alleviated the country's power shortages in recent years, but supply could still be at risk due to the closure of several coal- and gas-fired power stations, Australian Energy Market Operator (AEMO) has warned.

Post the shutting down of coal and gas power stations, generation and transmission projects have been impacting the supply in Eastern States. AEMO warned the supply may fall short during this summer in South Australia before spreading to New South Wales and Victoria in the later years, reported ABC News.

Moreover, several homes and businesses are setting up solar projects on rooftops boosting supply, though these may not be helpful during extreme heat.

However, extending the life of the 2.9 gigawatt Eraring coal plant north of Sydney, which is Australia's single biggest generator, has eased the risk of outages.

AEMO chief executive Daniel Westerman said, "Compared to last year's report, the reliability outlook has improved, assisted by the progress of 5.7 gigawatts of grid-scale generation and storage, and 365km of new transmission developments. It is critical that expected investments in generation, storage and transmission are delivered on time and in full. If delays occur to projects already underway or further investment does not materialize, then the outlook for reliability will deteriorate."

As a short-term solution to ensure supply, AEMO said it would make sure retailers have sufficient supplies to meet demand during a peak that occurs once every two years. Additionally, AEMO would secure contracts with major energy users to ensure they can reduce or switch off their demand if the system experiences severe stress.

Dan Lee, a market analyst from Global Roam, said AEMO's report, known as the electricity statement of opportunities or ESOO, was designed to tackle potential shortfalls, adding that it should be seen as a call for caution, and not panic.

Solar, wind and hydro contribute to 40% of electricity on the east coast, which was nearly double the amount five years ago, reported The Guardian.

The Labor government claimed to achieve 82% by 2030. However, according to the clean energy industry, investment in new large-scale renewable energy such as solar farms and wind farms declined drastically in 2023. In response, the federal government announced large-scale projects, which would add 32GW of renewables and storage by 2030.

Westerman said the country needed to install 6 gigawatts of capacity each year if it has to meet the target set by the government.