Net Zero Transition to Create Energy Shortage in Western Australia: Regulator

Perth, Western Australia. Marcella Miriello/Adobe Stock

Western Australia (WA) is heading toward energy shortages in the next few years as a result of the transition to renewable energy, a wholesale market forecast has found.

This has prompted energy regulators to call for urgent investments in the state’s power generation, storage and transmission.

The call follows the release of the Australian Energy Market Operator (AEMO) 2023 Electricity Statement of Opportunities report (pdf) for WA’s main electricity network, which provides a snapshot of the market’s outlook for the next ten years.

The report forecasted that the state could face a potential shortage of 945 megawatts of electricity in 2025-26 and around 4,000 megawatts by 2032-33, which was much worse than what was predicted in the 2022 outlook.

Renewable Transition Is Behind Energy Shortages

The report cited a reduction in coal-fired generation and strong growth in electricity demand driven by the transition to renewable energy as the main reasons for the potential shortfalls.

Specifically, the AEMO pointed out that WA planned to retire Synergy’s Collie and Muja D Power Stations in phases by 2030 and the Bluewaters Power Station from 2030-2031.

These planned shutdowns will cause the state to lose 1,366 megawatts of generation capacity in the next decade, posing significant risks to the electricity grid.

Regarding energy demand, the energy regulator expected operational electricity consumption in WA to increase at an average annual rate of 5.6 percent to 30.3 terawatt hours by 2032-33, a significant shift compared to the average annual drop of 0.4 percent projected in the 2022 report.

In the case of greater development in the “green” hydrogen sector, the AEMO forecasted that operational consumption might soar to 58.9 terawatt hours by 2032-33.

The report said the jump in electricity demand was due to business electrification, growth in air-conditioning and electric vehicles (EVs), and the expansion of industrial capacity as a response to many industries’ commitments to decarbonise.

The residential and business sectors were also expected to see a surge in electricity consumption resulting from the growth in cooling loads, home appliance uptake and EV adoption supported by government policies.

Solar panels can be seen on a roof in Albany, Western Australia on Aug. 14, 2023. Susan Mortimer/The Epoch Times

“The rapid energy transition is now fuelling very strong forecast growth in electricity demand. At the same time, we’re transitioning to new, lower-emissions sources of supply and managing the phase-out of coal-fired generation,” said AEMO Executive General Manager Western Australia and Strategy Kate Ryan.

While the general manager said that the AEMO could enforce some measures to meet electricity demand, she noted that they were not enough to tackle energy shortages in the long term.

“Where there’s a supply-demand shortfall, we have mechanisms available to procure additional capacity in the near term, as we did last year,” Ms. Ryan said.

“However, it’s critical that the pipeline of energy projects is developed in a timely way to alleviate forecast reliability challenges and support the ongoing energy transition.”

More Investments Needed to Address Energy Shortages

In the latest report, the AEMO estimated that 5,543 megawatts of generation were needed to meet the Reserve Capacity Target for the 2025-2026 period.

However, there would only be 4,598 megawatts available in the network by the time, including 4,467 megawatts of existing capacity and 131 megawatts of committed capacity–generation capacity that is assured to be available over a defined time period.

This means the committed capacity would not be sufficient to address the increase in demand and result in a shortfall of 945 megawatts.

While there were several other generation and storage projects in different stages of development, they did not meet all the criteria to be considered as committed.

The situation would get worse in the later years as it was estimated that the additional capacity required would go up to 1,118 megawatts by 2026-2027 and 4,000 megawatts by 2032-2033.

As such, the AEMO called for significant investment in “firmed renewables” and the network transmission capacity in the next 20 years to ensure the reliability of WA’s power grid.

“This year’s reliability outlook highlights the need for significant and sustained investment in additional capacity, fast-tracking the pipeline of generation, storage and demand-side projects, along with investment in transmission infrastructure, to meet reliability standards,” Ms. Ryan said.

“Increased capacity investment is needed for a robust and resilient power system capable of meeting future demand and facilitating the transition to a cleaner and more sustainable energy future,” she added.