25-year roadmap to net zero


Tuesday, 02 July, 2024

25-year roadmap to net zero

The Australian Energy Market Operator (AEMO) has released its latest Integrated System Plan (ISP) — a 25-year roadmap for transitioning the National Electricity Market (NEM) to net zero by 2050.

The ISP comes after two years of consultation, analysis and review involving 2100 stakeholders, 85 presentations and reports, and the consideration of 220 formal submissions.

There is increasing urgency to renew the NEM given the progressive closure of Australia’s remaining coal-fired power stations. With 10 large coal-fired power stations having closed since 2012, the ISP projects that 90% of today’s capacity will be closed by 2035 and none will remain by 2040.

With this ISP, AEMO confirms that renewable energy connected with transmission and distribution, firmed with storage and backed up by gas-powered generation is the lowest-cost way to supply electricity to homes and businesses as Australia transitions to a net zero economy.

“The ISP is a roadmap to navigate Australia’s power system through the energy transition, providing Australians with reliable electricity at the lowest cost,” said AEMO CEO Daniel Westerman.

“A record number of stakeholders have contributed to identifying the most efficient development path of generation, storage and transmission investments, critical to meet consumer energy needs as Australia transitions to a net zero economy by 2050,” he said.

The ISP’s centrepiece is the optimal development path (ODP) — a mix of replacement grid-scale generation, storage and transmission, with an annualised capital cost of $122 billion to 2050. The ODP is presented as the lowest-cost path to meeting federal and state government energy policies on emissions reductions.

This plan’s trajectory is consistent with previous editions of the ISP, which AEMO produces every two years under Australian energy laws. Since the ISP must be consistent with these laws, including government policies and targets, the ISP does not model nuclear power as it is not government policy and is not permitted under Australia’s current laws.

“Australia’s energy transition is well underway, with renewable energy accounting for 40% of electricity used in the past year,” Westerman said.

Almost 10,000 km of new transmission lines are required by 2050 to connect new sources of generation and meet reliability targets at the lowest cost to consumers, the ISP revealed.

With 10 projects, or 2500 km, already underway, the plan identifies a further seven projects that should now progress through planning and delivery. AEMO said it recognised the clear need for early community engagement and effective consultation on these projects.

While the cost of the transmission projects is $16 billion, they are expected to recoup their investment costs and, additionally, save consumers $18.5 billion in avoided energy costs as well as delivering emissions reductions valued at a further $3.3 billion.

Building and maintaining energy infrastructure over the next 20 years is expected to support more than 60,000 energy jobs.

Gas is still considered integral to the ISP, playing a crucial role in back-up electricity generation when renewables are unavailable.

The other essential technologies factored into the roadmap are domestic rooftop solar panels and associated batteries, smart systems and electric vehicles, or what the ISP calls “consumer energy resources”.

The ISP also identifies challenges and risks accompanying the energy transition. For example, planned projects are currently facing delivery challenges, including approval process delays, investment uncertainties, cost pressures, social licence issues, supply chain disruptions and workforce shortages.

“There is a real risk that replacement generation, storage and transmission may not be available in time when coal plants retire, and this risk must be avoided,” Westerman said.

“This ISP is a clear call to investors, industry and governments for the urgent delivery of generation, storage and transmission to ensure Australian consumers continue to have access to reliable electricity at the lowest cost.”

Image credit: iStock.com/THP Creative

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