Australia Urgently Needs To Invest In Renewables And Energy Storage

Australia needs urgent investment in renewable energy generation and energy storage to avoid issues with grid reliability from 2025, the Australian Energy Market Operator (AEMO) said on Tuesday.

In an update to the 2022 Electricity Statement of Opportunities (ESOO) report, the Australian regulator said that reliability gaps would begin to emerge for the National Electricity Market (NEM) from 2025 onwards.

The gaps between supply and demand are set to widen when at least five coal power stations totaling around 13% of the NEM’s total capacity are expected to retire, the market regulator said.

“Urgent and ongoing investment in renewable energy, long-duration storage and transmission is needed to reliably meet demand from Australian homes and businesses,” AEMO CEO Daniel Westerman said in a statement.

In June last year, the regulator flagged a “lack of reserve” forecast in Queensland, warning of possible blackouts. The country narrowly avoided power cuts after some coal-fired power plants suffered unplanned outages while gas prices were sky-high for gas-fired power generation.

Today’s update from the regulator reiterates the critical need for timely investment in generation, long-duration storage, and transmission to fill forecast reliability gaps as Australia moves rapidly away from its traditional dependency on coal generation, CEO Westerman said.

“Overall, there remains an urgent need for additional commitments to occur, including in dispatchable projects such as long duration storage, to satisfy reliability requirements over the next 10 years,” the regulator noted.

Meanwhile, Australia’s main energy trade partners and allies are increasingly concerned about the latest proposals for energy market interventions in Australia, which could also undermine new investment plans in Australian natural gas and other energy resources. Earlier this month, the Australian government proposed reforms to the Australian Domestic Gas Security Mechanism (ADGSM), “to ensure that there is a sufficient supply of natural gas to meet the forecast needs of Australian gas consumers by controlling, if necessary, LNG exports.”   

By Tsvetana Paraskova for Oilprice.com

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