Mainland Australia Could Face Electricity Shortages by 2027: Energy Market Operator

Office buildings and street lamps are seen illuminated in the central business district in Sydney, Australia, on June 21, 2022. Lisa Maree Williams/Getty Images

The Australian Energy Market Operator (AEMO) has warned that the country’s mainland states could experience electricity shortages as early as 2027 and called for urgent investments in the sector.

In the latest national electricity market update (pdf), the AEMO revealed that while Australia had sufficient electricity generation capacity in the next couple of years, the country urgently needed new projects to go online to ensure the power grid’s reliability over the next decade.

This happens as Australia continues to phase out coal-fired power stations while facing delays on some major projects.

The report listed a number of major changes to the energy system in the past few months, including new gas, wind and battery developments in the National Electricity Market (NEM), the bringing forward of the shutdown of AGL’s Torrens Island B Power Station, and a delay to the Snowy 2.0 hydro project and the gas-fired Kurri Kurri Power Station.

The changes have filled the short-term reliability gaps in South Australia (2023/24) and Victoria (2024/25) that were identified in the previous forecast.

A general view of the Loy Yang power plants in Traralgon, Australia, on Aug. 17, 2022. Asanka Ratnayake/Getty Images

However, the report predicted that mainland states in the NEM would face electricity shortages from 2027 onward as at least five coal-fired power stations in the region–which account for 13 percent of the market’s capacity–would be shut down.

“What we see toward the end of the decade is increasing reliability gaps, and those gaps hit every mainland state in the NEM,” AEMO CEO Daniel Westerman said.

The CEO noted that the AEMO analysis only took into account committed projects that had been announced–those with firm expectations that they will deliver–and that those projects would not be sufficient to satisfy the country’s future energy needs.

“What we need to see is continuing investments and investment certainty in each [type] of renewable energy and transmission,” Westerman said.

Westerman added while it would take around two to three years to complete a renewable energy project, the process would be longer for building new electricity transmission networks and gas-fired power stations.

As such, the CEO called for urgent investments to be made in the energy sector.

Energy Minister Says Blackouts Will Not Occur

Following the AEMO’s update on the energy market, Federal Energy Minister Chris Bowen reassured Australians that the federal government was working to prevent blackouts in the future.

However, he noted there was more work to be done to close gaps in the power grid.

“It does mean that we’ve got more work to do,” Bowen told ABC radio.

“But I’m very pleased with the progress we’ve made so far.”

In addition, Bowen said work to legislate emissions reduction targets and new renewable energy projects were bringing positive changes to the system.

The minister added he believed the reliability gaps would be reduced in future updates from the AEMO.

Chris Bowen, Australian Minister for Climate Change and Energy, speaks at the Sydney Energy Forum in Sydney, Australia, on July 12, 2022. Brook Mitchell/Getty Images

Opposition energy spokesman Ted O'Brien warned that the Labor government’s current policies would cause Australians to face blackouts and higher bills.

Meanwhile, Climate Council senior researcher Carl Tidemann said wind and solar backed by big batteries were providing a reliable electricity supply to the grid.

“With the right government support, we can rapidly roll out more renewable generation, storage and grid infrastructure that will enable a reliable energy grid powered by 100 percent renewables,” Tidemann said in comments obtained by AAP.

New Industry Roadmap Reveals Massive Demand for Electricity

The AEMO’s analysis comes as the government has launched a roadmap for decarbonising Australia’s heavy industries.

The ambitious 30-year plan will cost the country $625 billion (US$432 billion) in both government and private investments.

While the hefty price tag is something to look at, one major problem with the plan is the massive amount of electricity needed.

The roadmap indicated that around 600 terawatt-hours would be needed each year for the electrification of the most heavily polluting operations.

This figure is equivalent to a two-fold increase in the country’s total current electricity generation.

And if Australia wants to establish new export markets for “green” iron and hydrogen, the demand for additional electricity would go up to 1,450 terawatt-hours per year.

Given the current state of the energy market and future electricity shortages outlined in the AEMO’s analysis, it is unclear how the government will ensure the implementation of the decarbonisation plan.