The renewables industry is determined to rise to the challenge and deliver a faster-than-predicted clean energy transition as modelled by the Australian Energy Market Operator in the 2022 draft Integrated System Plan.
Last week, AEMO’s 2022 draft Integrated System Plan (ISP) revealed that renewables are muscling out coal-fired power plants two to three times faster than expected.
Distributed energy sources will continue to play an important role under the new modelling, with the energy market operator forecasting solar PV systems for more than half of Australia’s homes by 2030.
The energy regulator also expects strong battery uptake in the late 2020s and early 2030s as costs decline, and same with EVs thanks to falling costs, greater model choice and more charging infrastructure.
By 2050, the market operator imagines distributed systems – including residential and commercial rooftop PV, battery storage, VPPs and EVs – to be producing around 90 GWh of electricity. This amounts to five times the current capacity and is enough to meet about a fifth of the NEM’s total underlying demand.
And, under the most likely scenario – which in the last edition of the ISP report, was the most optimistic scenario – the market operator expects to see nine times the utility scale solar and wind generating capacity by 2050.
To support these variable forms of energy, the energy market operator ascribed big figures for both storage and transmission infrastructure.
As much as 45 GW / 620 GWh of storage will be needed, in various forms including batteries, pumped hydro and gas (although its noted gas-related emissions will need to be offset or substituted for zero carbon fuels), and around 10,000 km of new transmission.
For every dollar put into transmission, the market operator expects to see $2.50 returned to the market.
Customers will also be using more energy due to the electrification of driving, cooking, manufacturing and other activities once reliant on fossil fuels. The energy system will need to deliver double the energy it is currently producing under this scenario. If Australia leans into its “hydrogen superpower” potential and starts powering the world with its green hydrogen, it will need to deliver four times as much.
The news that Australia’s energy transition is progressing faster than expected has, unsurprisingly, been met warmly by clean energy advocates.
Clean Energy Council chief executive Kane Thornton is keen to focus on what needs to be done by 2030 not 2050.
“Already, we have seen the most ambitious, aggressive forecasts from the previous ISP becoming the base case. It’s happening now, and it’s happening fast. So, this is not about what we might achieve by 2050.”
Thornton also said that turning AEMO’s projections into reality will rely on the right policy settings from government.
Richie Merzian, climate & energy program director at the Australia Institute, wants to see an orderly transition away from coal.
“The last thing anyone wants is to see a repeat of the disruptive Hazelwood closure,” he said.
“Coal generators in Victoria are now obligated to give five years notice before retiring. The notice period is three years elsewhere,” Merzian said.
“It is time to stop talking in hushed tones and behind closed doors about the retirement of coal, and start openly discussing and planning early retirements this decade.”
The value of investing in transmission was also emphasised by industry leaders.
“The ISP makes clear that strategic investment in networks is essential to allow the rapid growth in low-cost renewable generation,” Energy Networks Australia chief executive officer Andrew Dillon said.
“The key transmission projects in the optimal development path are forecast to deliver $2.50 for customers for every $1 invested.
“Critically, the draft ISP outlines how the cost of delivering critical transmission projects early is far lower than the cost of delivering them too late. This is especially the case if coal generators retire faster than currently scheduled.”