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Dec 15 2023

AEMO Plan Identifies Dispatchable Plant Deficit

The latest assessment of our energy system points to the urgency of getting sufficient firming capacity in place to back up the transformational injection of renewables into our grid, according to the peak body for energy retailers and generators, the Australian Energy Council.

The Australian Energy Council’s Chief Executive, Sarah McNamara, said the Australian Energy Market Operator’s latest draft Integrated System Plan (ISP) highlights the sheer scale of the energy transition that needs to be delivered in a relatively short timeframe to meet government objectives.

“The market operator is correct in its assessment that for this once-in-a-lifetime renovation of our grid to work for consumers it must balance reliability and affordability with lower emissions.

“Importantly, this ISP points to the need to ensure we have enough dispatchable plant – plant that can step in at short notice - available to enable coal plants to leave the system.  It has identified an increased role for peaking gas-fired generation since its last assessment two years ago – with an additional 16GW of peaking gas generation now considered necessary.

“The near quadrupling of needed firming capacity – gas sitting alongside hydro, pumped hydro and battery storage - is a clear reflection of an emerging deficit of dispatchable plant that needs to be addressed.

“As noted by AEMO, renewables firmed with batteries alone won’t ensure energy security as coal plants exit, hence the broader role for longer duration technologies such as gas. Gas will be used for peaking and during renewable droughts.

“Policy and investment signals must support the level of new plant needed, and there is more work to be done here,” Ms McNamara said.

“We also cannot lose sight of customers in this transition.  This ISP highlights that given its sheer scale, the energy transition is neither easy nor costless. The price tag will be big if we get it right, but astronomical if we get it wrong.

“It is incumbent on all of industry to continually ask itself: how do we best deliver the transition and how will it be paid for. While the ISP makes some bold assumptions in terms of ‘do-ability’, it does provide some guidance as to how things might unfold.

“The AEC agrees with AEMO - what happens next is what counts.  It’s now up to government, investors and market bodies to ensure we can deliver the transition at least cost, so that community support can be maintained.”

 

About the Australian Energy Council

The Australian Energy Council is the peak industry body for electricity and downstream natural gas businesses operating in the competitive wholesale and retail energy markets. AEC members generate and sell energy to 10 million homes and businesses and are major investors in renewable energy generation. The AEC supports reaching net-zero by 2050 as well as a 55 per cent emissions reduction target by 2035 and is committed to delivering the energy transition for the benefit of consumers.

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