Renewables Could Meet All Power Demand in Australia at Certain Times by 2025: AEMO

Growth in distributed solar is meeting more daytime consumer demand


Australia’s mainland National Electricity Market (NEM) states could have sufficient renewable energy resources available in 2025 to meet the cumulative power demand of consumers in certain periods, Australian Energy Market Operator (AEMO) said in a recent report.

In addition to utility-scale projects, AEMO expects another 8.9 GW of commercial and residential solar photovoltaic (PV) to be installed by 2025 in mainland NEM states. The NEM includes states like Queensland, New South Wales, Victoria, South Australia, and Tasmania.

The 8.9 GW of commercial and residential solar capacity is expected to supply up to 77% of overall power demand at times by 2026, resulting in a drop of 4 GW to 6 GW in minimum operational demand across NEM mainland by 2025 down from 19 GW in 2019.

The report stated that the growth in distributed solar satisfies more daytime consumer demand, driving down minimum demand from the grid faster than projected last year. It added that operational power consumption is expected to reduce from 178 TWh in 2020-21 to 163 TWh in 2025-26 due to the large uptake of distributed solar.

Daniel Westerman, Chief Executive Officer of AEMO, said, without additional operational tools, AEMO would not be able to operate the mainland NEM securely in all periods from 2025 due to a lack of security services when demand from the grid is very low. This could also happen before 2025 under abnormal network conditions like network and generation unit outages due to storms.

The Energy Security Board has proposed a suite of reforms to provide essential system services to address these needs. In addition, approved investment in existing and new transmission infrastructure – including Project EnergyConnect linking South Australia and New South Wales – will reduce costs by sharing energy resources while enhancing resilience and security across the NEM.

Over 121 GW of energy projects is currently in the pipeline, with the largest capacity pipeline in New South Wales. Over 67% are renewable energy projects, and over 25% are battery storage or pumped hydro projects.

Westerman said, “Significant renewable energy investments, and well-progressed dispatchable generation projects, including gas, pumped hydro, and battery storage projects, will help replace retiring thermal facilities. The new dispatchable capacity will also enable higher penetrations of low-cost solar and wind generation into the market in the coming years.”

The report stated that several coal-based power facilities would be retired in the upcoming decade, including the Yallourn Power Station in 2028, a unit of Eraring Power Station in 2030, and a Torrens Island B Power Station unit in 2021. However, there will be no reliability gaps for the next five years due to over 4.4 GW of new generation and storage capacity and lower peak demand forecasts.

According to an indicative reliability forecast from 2025-26 to 2030-31, if no additional dispatchable energy or transmission projects come into the market, reliability gaps would occur in Victoria from 2028-29 and New South Wales from 2029-30.

“As the energy transition accelerates, the decarbonization of other sectors also needs careful planning of their interface with the energy system. This will require the right incentives, policies, technologies,

and importantly building a social license with consumers who are increasingly central to our energy future,” said Westerman.

According to data released by Australia’s Clean Energy Regulator, Australia installed 729 MW of rooftop solar capacity in the second quarter of 2021, an 8% increase compared to 677 MW in the same period last year.

Mercom had earlier reported that the government of New South Wales simplified the process to install renewable energy systems in strata buildings through the passage of new amendments in the Parliament.


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