Good morning, it’s great to join you for Energy Week 2026.
I’d like to begin by acknowledging the Traditional Owners of the land, the Wurundjeri and Bunurong peoples, and pay my respect to their Elders past and present.
In 2022, I stood here at Energy Week while the world was grappling with energy price shocks from Russia’s invasion of Ukraine.
A few days later, the first significant impacts appeared in Australia’s east coast gas and electricity markets.
Extreme prices intersected with a cold snap, generator outages and various other factors, which led to one of the most challenging periods that AEMO has ever experienced.
After making extraordinary efforts including issuing around 500 directions to over 5 gigawatts of generation plant, we took the unprecedented step of suspending the entire National Electricity Market to ensure electricity supply remained reliable for consumers.
That was 2022.
Today, the world is navigating another energy crisis due to the unprecedented closure of the Strait of Hormuz, but so far the impact on Australia’s gas and electricity supplies has been muted.
Gas supply is strong, storages are full, and prices remain stable.
Australia’s electricity systems have evolved significantly since then too, with more generation available, from a more diverse mix of supply, and market settings that have also evolved.
Australia’s energy systems are in better shape to weather disruption today, than they were in 2022.
The evolution of our energy systems is even more stark when we compare today’s system to when the NEM was created in 1998.
The difference is profound.
The number of large-scale generators has increased nearly six-fold from around 60 facilities, to over 340 today, and still growing rapidly.
In fact, the capacity of generation and storage projects that are progressing their connection to the NEM is almost equivalent to the capacity of the entire existing fleet.
In the last week of May, there were 22 new facilities actively testing equipment.
In contrast, nearly 40% of the NEM’s coal fleet has retired since market start, and the average age of remaining stations is 38 years.
They’re old, they’re breaking down more often, and their outages last for longer.
Australia’s electricity systems are steadily transforming from the old paradigm of baseload coal and peaking gas to a new reality where variable renewable energy is firmed by storage and backed up by gas.
By far though, the most profound transformation has not been connected to high voltage transmission.
It’s been the addition of more than 4 million generators that sit on the rooftops of one in every three Australian homes, as consumers have increasingly taken control of their own energy future.
Many here will know that the generating capacity of consumer resources today is larger than the capacity of the remaining coal fired power stations, at times meeting more than 60% of all demand in the NEM.
Home batteries are now emerging as another game-changing force, with over 400,000 installed in the past 12 months alone.
Electric vehicles have similar potential.
As a result, the way that 'demand' behaves on the grid, has been completely transformed.
When the NEM started, demand was forecast and demand was met. And that was that.
Energy users were just users of energy, with a limited set of products to choose from and very little innovation in the market to meet their needs.
But today, large energy users from manufacturing and mining to retail and infrastructure, increasingly contribute to the dynamics of the market, with behind the meter generation, storage, controllable loads and sophisticated energy management systems.
Flexible energy use by big energy users is no longer just something the system reacts to; it’s a genuine system asset with increasing market benefit.
Households too are also investing in on-site generation and storage – through rooftop solar and batteries – and increasingly in electrification of their appliances and transport.
And this new wave of home batteries are starting to have a real impact on the way those homes are interacting with the grid.
In fact, let me bring that to life for you.
On January 27th, here in Victoria, peak demand hit a new all-time record.
Air conditioners at home and work were running hard as temperatures exceeded 43 degrees.
At 6pm, Victoria’s 17-year-old record for peak demand was broken by nearly 200 megawatts.
But for us at AEMO, neither the new demand record nor the sweaty night were the most remarkable part of that day.
It was the window into the future provided by households with new home batteries.
For the most part, these were not sophisticated virtual power plants with central control over the home battery’s activity.
Most batteries were operating in a passive mode; soaking up self-generated solar power during the day, while some supplemented that during periods of free power from their retailer.
That stored energy was then used to power their home during the evening peak, meaning they drew less power from the main grid.
To quantify that: at the time of record peak demand, homes with batteries were each drawing 1.4 kilowatts less than homes with just solar.
That’s an 80% reduction during a record demand, and the impact of those batteries extends beyond the peaks.
In fact, on average, across the first quarter, households with batteries reduced the amount of energy they drew from the grid during the evening peak by nearly a kilowatt.
That demand reduction the household directly through lower energy bills, and it benefits the wider energy system by reducing demand overall.
That’s a win for consumers everywhere.
Australia is a world leader in batteries, both large and small.
In the National Electricity Market, there is now around 7 gigawatts of grid-scale battery capacity in a system with peak demand of about 33 gigawatts. That’s enough capacity to meet roughly 20% of peak demand.
It’s a higher share than Texas, which has enough grid scale storage capacity to meet nearly 17% of peak demand…
…although still below California, with enough to meet over 25% of its peak.
Western Australia now has an incredible 1.5 gigawatts of grid-scale batteries against a peak demand of around 4.5 gigawatts, among the highest proportions of grid-scale storage anywhere in the world.
If anything, growth is even stronger in small-scale batteries.
Australia now has around 600,000 homes with installed batteries – that’s nearly three times the number in California.
And these batteries, large and small, are fundamentally changing the way electricity is produced, consumed and priced across the day.
During the first three months of this of this year, grid-scale batteries in the NEM more than tripled the amount of energy they shifted from daytime to the evening,
On average, batteries delivering more than a thousand megawatts into the evening peak during Q1, reducing the need for more expensive peaking gas generation.
Grid scale batteries were the most frequent price‑setting technology, setting prices in around 32% of trading intervals.
Obviously, those batteries, which provide the system with a new degree of flexibility, are both users and suppliers of energy.
It illustrates how much has changed from market start, when there was a clear boundary between supply and demand.
That’s what the market, rules and frameworks were built around, and this thinking still permeates our industry.
With respect, you can still see it in the agenda for Energy Week: today is focused on grid-scale or supply side, tomorrow is small-scale or demand side.
Consumers and technology have disrupted this model, and that presents both opportunities and challenges for Australia.
There is a real opportunity for a lower cost energy system for everyone, if demand-side technologies can participate in the market where it makes sense, while the necessary investment continues in large scale generation, storage and networks.
That means embracing a whole-of-system approach, where every available resource has the opportunity to fully participate.
It means solving some difficult technical, policy and engineering challenges, some of which go back to the birth of the NEM.
And it means empowering consumers to make the most of their resources for their own needs, and also for the grid.
It’s not a question of choosing between grid-scale generation or the optimisation of flexible energy use.
It’s both.
And our energy systems, markets and frameworks need to evolve to accommodate this.
One area that needs evolution is the visibility of these millions of devices that impact both system operations and market price outcomes.
When resources remain invisible, in real time or ahead of dispatch, it prevents the market from anticipating the supply-demand balance accurately, and ultimately from finding energy at the lowest price.
This problem isn’t new. Most recently the NEM Review Panel made several recommendations to improve market visibility.
It matters both for market outcomes, as well as system stability and security.
But that doesn’t mean that every single consumer resource needs to provide visibility … that would be overwhelming and unnecessary.
There just needs to be enough visibility to allow for accurate forecasting and participation decisions to be made, including feedback to the market on how resources behave.
To help find the pathway that delivers real benefits to consumers, AEMO has just begun some collaborative work on the design of a market visibility framework for price responsive resources, so please do get involved.
This visibility framework is just one piece of the puzzle the industry, governments and AEMO need to solve to enable a 'whole energy system' solution.
There are meaningful benefits.
The Draft 2026 Integrated System Plan showed that the total cost of the energy system can be reduced by $7.2 billion if consumer energy resources respond to market signals.
That benefit assumes that roughly half of all household and commercial batteries respond to market signals through virtual power plants.
But let’s not make 'perfect' the enemy of good progress.
The Victorian example I mentioned earlier shows that less sophisticated home battery operations that respond to simple signals can also have meaningful benefit for all users.
So what is AEMO doing?
Well, for some time, AEMO has been working with industry, governments and other market bodies to better reflect a 'whole of energy system' approach into our forecasting and planning.
Like all of us, we’re on a journey and we’re not going to get it right every step of the way.
We need to work differently, with even more participants, in an even more collaborative way.
Developing technical requirements, data sharing and connection arrangements, and planning frameworks will all need work.
Now the Electricity Statement of Opportunities (the ESOO) and the Gas Statement of Opportunities (the GSOO) have considered the demand-side more and more over time, but the primary question for those publications is still: 'will there be enough energy?'.
So the new Demand Side Statement of Opportunities – the DSOO that we’re very excited about – will ask: 'how can demand help solve the problem?'
In fact, the DSOO represents a very big shift in how demand-side actions will be treated in planning, at a time when new technologies like bi-directional EV charging, could have uncertain implications for the grid.
So the DSOO won’t be just another report, or another set of scenarios.
It requires AEMO’s forecasting and planning to evolve so that we can better understand what is happening in the systems we operate, and what is needed to keep them reliable and secure at the least cost to consumers.
AEMO has prepared a Demand Side Factors Statement as part of the work we do on the Integrated System Plan.
It is genuinely world-leading work, albeit not-so-prominently placed as Appendix 9 of the Draft ISP.
It looks at how developments on the demand side — like the rooftop solar, batteries, and energy efficiency — could change what the power system needs in the future.
When you combine these insights with the plans prepared by distribution companies, a clear window into some of the opportunities sitting within distribution networks begin to emerge.
Distribution companies know their networks best, and retailers know their customers best, while AEMO has the best view of the operations of the system and market overall.
You can probably tell that AEMO is very much looking forward to working with everyone involved to consider the whole system more effectively.
The final 2026 ISP will be released on the 25th of June.
And I don’t think I’m releasing too many secrets when I note that we have had to update a few things between the draft and the final, including the strong uptake of home batteries.
But the fundamental conclusion of the ISP remains: that renewable energy, firmed with storage, backed up by gas and supported by upgraded networks, remains the least cost way forward for Australia.
'Renewable energy' includes grid scale solar and wind, and rooftop solar.
And 'storage' includes pumped hydro and grid scale batteries, as well as batteries in homes, cars and on low voltage networks.
By 2050, consumer energy resources are forecast to reach over a third of the NEM’s capacity.
And flexible industrial load will be significant, although uncertainty remains around the size and scope of these resources.
One growing category of energy use which is never far from the headlines is data centres.
They’re not new. In fact, average data centre demand through Q1 of this year in the NEM was nearly 600 megawatts.
However, with the incredible increase in capability and adoption of AI, data centres are becoming the backbone of our digital economy even more quickly, and a powerful engine for Australia’s future prosperity and growth.
At AEMO we’re focused on delivering fast and efficient connections, so that major new energy users like data centres can connect without shifting costs or risks onto existing users.
In the first quarter of this year, there were 11 data centres totalling 5.4 gigawatts of ultimate load working through a transmission network connection.
Our forecasts already considered growth in demand from data centres in both transmission and distribution networks, and considering the strong development activity we’re seeing, it is likely that our current forecasts will materially increase.
There are a few things to bear in mind when hearing about large capacities and volumes of connection requests.
First, the ultimate connection capacity is not required on day one.
Projects are built in stages and that ultimate capacity may be a decade away.
Second, projects often pursue multiple connection options, which makes the overall pipeline look larger than it actually is.
Energy systems are the backbone of modern society, so it’s important that collectively we’re able to enable these energy users who in turn enable Australia’s productivity and economic growth, without compromising reliability or impacting costs for all consumers.
This is a top priority for AEMO, one we share with governments and industry.
So let me wrap up.
I’ve spoken today about how flexibility is fundamentally changing Australia’s energy systems and markets.
Already today, but increasingly into the future, this flexibility comes from energy users … be they households or industry.
It is now more clear than ever that enabling the whole energy system will result in a lower cost system for everyone, and AEMO is more ready than ever to embrace this change.
And while there is a lot to do, from technical standards to market visibility, let’s not let striving for a perfect solution stand in the way of pragmatism and progress.
Because as Australia’s energy transition continues to unfold, there will be many other bumps and challenges along the way.
Thank you.
[ENDS]