Australia will close down all coal-fired power stations by 2038 at the latest, with an even faster transition to be expected in the next decade.
Under a scenario that is most likely to happen, the AEMO predicted that 90 percent of the coal-fired power plants in the National Electricity Market, which covers most Australian states and territories except for Western Australia and the Northern Territory, would retire before 2035.
By 2038, the entire coal fleet will cease to operate, which is five years earlier than what was forecasted in the 2022 roadmap.
The AEMO also said the complete phase-out of coal-fired power stations might occur even earlier than the 2038 timeline, as energy producers found it increasingly less attractive to hold onto those assets amid the wider push towards net zero.
“Ownership has become less attractive, with higher operating costs, reduced fuel security, high maintenance costs, and greater competition from renewable energy in the wholesale market,” the roadmap said.
Meanwhile, Climate Change and Energy Minister Chris Bowen said the AEMO’s roadmap showed that renewables were a firmed path for a “cleaner, cheaper, more reliable grid.”
Billions in Investment Needed
The market operator anticipated that household and business electricity consumption would nearly double from the current 174 terawatts an hour, to 313 terawatts hour by 2050.It believed the lowest-cost pathway for secure and reliable electricity was from renewable sources that were supported by batteries and pumped hydro, as well as firmed up by gas-powered generation.
To achieve that vision, the AEMO said the government and the private sector urgently needed to invest in new renewable sources, transmission, storage, and flexible gas generation.
Specifically, storage capacity needed to increase nearly 20 times from the current three gigawatts to 57 gigawatts by 2050.
Grid-scale wind and solar generation need to rise seven-fold, while rooftop solar and other distributed solar capacity must increase four-fold.
Gas-powered generation must also increase from 11 gigawatts to 16 gigawatts by 2050.
At the same time, around 10,000 kilometres of new transmission lines and upgrades to existing networks were required by 2050 to connect renewable sources across the country to the power grid.
The AEMO estimated that the annualised capital cost of all generation, storage, firming, and transmission infrastructure under the optimal development path would reach $121 billion (US$81 billion).
AEMO Admits to Risks With Roadmap
While the AEMO considered the transition to renewable energy an inevitable development path for Australia’s energy system, the market operator was aware of many risk factors to its roadmap.One was the uncertainty of infrastructure investment.
Energy projects may not progress or deliver according to the planned timelines for many reasons, such as difficult approval processes, investment uncertainty, cost pressures, social licence issues, supply chain issues, and workforce shortages.
Lastly, another risk is the impact of coal-fired power plant retirements.
As many energy producers are accelerating the shutting down of their coal fleets, the AEMO is concerned about having little time to respond to sudden closures.
“While almost all owners of coal generators have announced their long-term retirement plans, they are only required to give three and a half years’ notice of a closure,” the roadmap said.
“Closures with short notice increase the risk of near-term reliability challenges and price shocks for consumers, and further accelerate the need for new generation.”
The move raised significant concerns among the public about energy security and prices in New South Wales.
