Summer reliability outlook improves - timely investment is critical

The Australian Energy Market Operator’s (AEMO) latest analysis observes an improved reliability outlook across the next few years driven by the rapid development of distributed and large-scale renewables, increased transmission capacity and reduced peak demand, while also foreshadowing significant changes in minimum operating demand profiles across the National Electricity Market (NEM).

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Published today, AEMO’s 2020 Electricity Statement of Opportunities (ESOO) forecasts electricity supply reliability in the NEM over a 10-year period to help inform the decision-making of market participants, investors and policymakers.

This ESOO incorporates the uncertain impacts of the unfolding COVID-19 pandemic and as a result includes a forecast short-term reduction of peak demand and energy consumption over the coming summer in most scenarios.

AEMO Managing Director and Chief Executive Officer Audrey Zibelman, said that for the coming summer, this ESOO observes unserved energy is not expected to exceed the reliability standard or the Interim Reliability Measure (IRM) in any NEM region.

“It is great to see how industry’s investment in new resources improves the reliability outlook for this summer,” she said, noting an additional 4,300 MW of new variable renewable energy (VRE) capacity will be operational this summer compared to what was available last summer.

“In future years, the declining reliability of the aging coal fleet and scheduled plant closures contribute to projected increases in unserved energy, particularly in New South Wales (NSW), and to some degree in Victoria. Timely investment in transmission projects identified in AEMO’s latest Integrated System Plan (ISP), and projects such as those announced under the NSW Emerging Energy Program, will help address this risk.

“While the outlook has improved, it is clear from last summer’s extreme weather events and devastating bushfires that summer readiness planning remains as important as ever, including obtaining short-notice Reliability and Emergency Reserve Trader (RERT), to ensure we have all the tools available to mitigate challenges if they arise.”

In NSW, reliability and resilience risks identified during high demand periods coupled with declining plant reliability and forecast plant closures prove the need for timely commissioning of new generation, storage and transmission investment in development, including the Queensland to NSW Interconnector (QNI).

The ESOO also forecasts rapid declines in daytime minimum operational demand levels in all NEM regions, as a result of continued strong uptake of rooftop solar installations. In South Australia, it points to the importance of Project EnergyConnect in helping alleviate system security risks under certain conditions when minimum operational demand is low.

Ms Zibelman said that the continued market transition, including challenges associated with minimum demand in the afternoon and high demand in the evening when the sun sets, highlight the needs for increased power system agility and resilience with a focus on working with industry and government to continue supporting regulatory and market-based reforms including the Energy Security Board’s Post 2025 Market Design reforms.

“With minimum demand carved out during the day, there’s an opportunity for innovative solutions and technologies to enter the market and utility-scale energy storage is likely to become increasingly important for daily operation,” Ms Zibelman said.

“As we continue to see the increasing shift towards non-traditional generators and the increasing take up of household rooftop PV, we are encountering new challenges of managing voltage, system strength, and inertia.

“To solve these, AEMO is collaborating with industry, jurisdictions and market bodies to develop new standards and to support cost-effective regulatory and market reforms that are required to keep the power system secure and reliable while lowing costs across the energy landscape.”

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Australia, AEMO, grid, renewables, reliability, connection, connector, NSW, Victoria, state, NEM, market, electricity, coal, PV, solar, wind

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