Market Update | 1 September

• AEMO highlights supply concerns as Australia looks toward hot summer ahead
• Report outlines clear win for grid capacity management with EV policy reform
• $3 billion announced for WA renewable projects surging up energy security 

Energy reliability report notes supply gaps for oncoming summer peak

The Australian Energy Market Operator (AEMO) has unveiled its 2023 Electricity Statement of Opportunities (ESOO) report, a decade-long reliability outlook highlighting development needs across states in the National Electricity Market (NEM). Informed by surveys, transmission data, and extensive analysis, the report emphasises the urgency of new investments to secure reliable, cost-effective, and cleaner energy. 

The projected retirement of 62% of the current coal fleet by 2033 is forecasted to create reliability gaps. AEMO CEO Daniel Westerman underscores the importance and urgency of promptly delivering planned investments in transmission, generation, and storage projects to ensure reliable electricity supply across the board.

The report notes that when considering existing, committed, and anticipated projects, the forecasted reliability risks are set to exceed the reliability standard as early as this summer for Victoria and South Australia and other states from 2025 onwards. However, the report also acknowledges the potential of the 248GW pipeline of proposed projects and further clarified that federal and state initiatives, including the Integrated System Plan and Capacity Investment Scheme, offer adequate solutions to manage reliability if executed on schedule.

Mr Westerman also reinforced the role consumers are able to play.
“There is also the opportunity for consumers’ rooftop solar, batteries and electric vehicles to actively participate in the power system, which would further reduce reliability risks,” he said.

The upcoming summer is expected to face elevated risk due to hotter, drier conditions and decreased coal-fired generation reliability. AEMO aims to collaborate with industry and governments to ensure reliable and affordable electricity in the long term.

The big potential for Australian bidirectional EV charging

The potential of bidirectional electric vehicle (EV) charging for Australia’s energy transition is significant, despite the uncertain consumer uptake. The 2022 ISP report by AEMO indicates that Australia’s EV fleet could offer around four times the required storage for the National Electricity Market (NEM) by 2050. If only 10% of this capacity were used for flexible bidirectional charging, it could meet 37% of the NEM’s storage needs, saving substantial investment (around $94 billion) in large-scale battery storage. The report claims that by the early 2030’s, EV fleet battery capacity is likely to surpass all other forms of storage in the NEM, including Snowy 2.0.

However, Australia’s lack of a policy framework for bidirectional charging and complex technical standards hinder international OEMs’ entry into the market. The report suggests that Australian policy should prioritise vehicle-to-grid (V2G) and vehicle-to-home (V2H/B) capabilities, enhance engagement in international standards development, and address issues in the Australia/New Zealand standards. Collaboration among network businesses to create supportive tariffs and ARENA’s facilitation initiatives are also recommended to realise the potential of V2G in Australia’s energy landscape.

WA lands a landmark agreement for renewable energy

The Western Australian and Federal Governments have inked a landmark agreement providing $3 billion to revamp and upgrade electricity grids in the state. The Commonwealth-Western Australia Rewiring the Nation deal will modernise grids in Perth, the South West, and the North West Pilbara region, enhancing energy security. The collaboration aims to bolster energy supply, create jobs, and drive cleaner energy.
The focus looks to incentivise private sector investment in expanding renewable energy capacity and transmission infrastructure, supporting decarbonization efforts, and empowering regional communities for many years to come.