MEDIA RELEASE

Thursday, 11 August 2016

The Australian Energy Market Operator’s (AEMO) 2016 Electricity Statement of Opportunities (ESOO) report released today illustrates the growing importance of network and non-network developments to securely manage an evolving, lower carbon electricity generation future.

The 2016 ESOO provides National Electricity Market (NEM) participants, investors, and policy-makers with a projected 10-year outlook to 2025-26 of supply adequacy under a number of scenarios, and this year further generation withdrawals have been modelled in response to the COP21 emission abatement commitment¹.

“As the NEM generation mix continues to keep pace with new technology and policy changes, future supply adequacy will depend on the availability and capability of new supply options providing electricity services when needed,” said AEMO Chief Operating Officer Mike Cleary.

From the information provided by industry, and assuming no additional generation withdrawals to occur between now and 2025-26, the only projected supply shortfall in the 2016 ESOO occurs towards the end of the outlook period in New South Wales.

“The 2015 ESOO identified New South Wales (NSW), South Australia and Victoria as potentially being at risk of breaching the reliability standard at various points over the next decade. The latest information suggesting only a shortfall in NSW in 2025-26 takes into account a reduction in demand forecasts, and illustrates a market response with some planned plant withdrawals deferred and an additional 537 MW of wind generation capacity announced,” said Mr Cleary.

However, additional to the information already announced by market participants, AEMO has modelled scenarios that assume the COP21 commitment is achieved, investigating the impact of potential, but not announced, generation withdrawals to meet the electricity sector target agreed by the Council of Australian Governments (COAG) Energy Council.

“AEMO has modelled the impact of withdrawing a further 1,360 MW of coal-fired generation capacity to meet the COP21 commitment under AEMO’s neutral scenario, with results suggesting potential reliability breaches occurring in South Australia from 2019-20, and New South Wales and Victoria from 2025 onwards.

“These breaches would most likely occur when demand is high (usually between 3-8pm), coinciding with low wind and rooftop photovoltaic (PV) generation, and low levels of electricity supply imported from neighbouring regions.

“In this scenario, the majority of coal-fired generation withdrawals are assumed to come from Victoria, which would reduce that State’s generation output to support South Australia and New South Wales via the interconnected network,” said Mr Cleary.

The 2016 ESOO report outlines the importance of maintaining power system security during this period of rapid transformation, and with the potential withdrawal of coal-fired generation across the NEM, a number of support services will need to be provided by other resources.

“The secure operation of the NEM’s 40,000 km transmission network - which transports generated electricity to demand points - is reliant on support services that manage the rate of change of frequency and system restart services.

“AEMO is signalling potential future supply gaps in providing these important stability services, gaps which could be met through prospective new forms of electricity generation, or alternative technologies.”

“To maintain a secure electricity supply demand balance during peak demand periods, AEMO is working closely with industry to identify both network and non-network developments. Possible solutions could include an increased interconnection across NEM regions, battery storage, and demand side management services,” said Mr Cleary.

AEMO’s 2016 ESOO follows the recent release of the 2016 National Electricity Forecasting Report, which looks at forecast electricity demand trends over a 20-year horizon. The ESOO analyses these demand trends against future generation availability to identify any potential breaches of the NEM reliability standard, which requires that no more than 0.002% of annual operational electricity consumption should go unserved for any region in any year.

AEMO will be hosting a roadshow for industry participants to critically examine and discuss options to maintain the high security and reliability standards that most Australians have become accustomed.

⁽¹⁾ Following the 2015 Paris 21st Conference of Parties, Australia has set a target to reduce carbon emissions by 26% to 28% below 2005 levels by 2030, building on the 2020 target of reducing emissions by 5% below 2000 levels.

2016 ESOO scenario reference table

For more information:
AEMO Media
Mobile: 0409 382 121
Email: media@aemo.com.au

Click here to download the media release

Click here to download the infographic

Click here to access the 2016 National Electricity Market Electricity Statement of Opportunities