Executive General Manager System Design Nicola Falcon, 20 October 2026
I’d like to begin by acknowledging the traditional owners of the land, the Kaurna people, and pay my respects to Elders past and present.
I also acknowledge our Chair today, Susan Jeanes, my fellow speakers and our international guests and thank Jenny Selway and the Heavy Industry Low-Carbon Transition (HILT) Cooperative Research Centre (CRC) for inviting me to participate in the fifth HiTeMP Forum.
The fact that this forum remains so highly valued after five years speaks to both the importance of the CRC’s work and the scale of the challenge in decarbonising heavy industry. AEMO is an Associate Partner of the HILT CRC, and we see synergies between its work and our own.
I’m conscious that the goal of this event is to advance international collaboration in support of net zero industry. For our international guests, AEMO operates Australia’s east and west coast electricity systems and markets, as well as gas markets in south-eastern Australia.
We are also the system planner for the National Electricity Market (NEM), so that will be my focus today.
When the NEM commenced in 1998, a relatively small number of large power stations supplied electricity through the grid to mainly passive consumers.
That model has long since vanished.
Today’s NEM is increasingly becoming an intricate system of systems, and the demand side is no longer passive.
Millions of consumers have rooftop solar panels and more than 600,000 have batteries. They are deciding when to store, use and export the electricity they generate, reshaping how the system operates. And the way that households fuel their energy use is changing too, as they begin to switch from gas to electricity for their heating and hot water.
A parallel transformation is slowly starting to take place behind factory gates and across large industrial sites.
Large energy users increasingly combine behind-the-meter generation, storage, controllable loads and sophisticated energy management systems.
As industry works towards net zero, the transition to a low-emissions power system will be a critical enabler. Just as we’re beginning to see in our homes, electrification will increasingly mean replacing gas and other fuels with electricity.
So the key proposition I put to you today is simple. This transformation of demand and the planning of the energy system must be considered together. They form an interconnected design challenge central to Australia’s energy transition.
As electrification gathers pace, that interdependence will only deepen.
As we venture down that pathway together, the scale, integration and flexibility of industrial load are all important considerations.
I’ll jump straight into the Integrated System Plan (ISP), the roadmap for the NEM’s energy transition.
Under the 2026 ISP Step Change scenario, total electricity consumption across the NEM, including electricity supplied by consumers’ own energy resources, is forecast to almost double from around 205 terawatt hours (TWh) today to 390 TWh in 2050.
Electrification is the main driver of the rise in consumption, adding 117 TWh by 2050.
Households’ consumption of electricity will rise, but their demand from the grid is forecast to fall by 44% as they produce, store and use more of their own power.
By contrast, grid-supplied electricity for business and industry is forecast to double from 140 TWh this year to 280 TWh in 2050, driven by electrification of industrial processes and freight, data centres, and potentially energy-intensive industries producing hydrogen and the materials of a lower-emissions economy.
I’m conscious that for an audience working on high-temperature processes, these forecasts aren’t abstract. They point to investment decisions about equipment, production capacity and processes and the places where new facilities will operate, and there are currently a number of barriers to be overcome if these forecasts are to be realised.
The outlook is also evolving. Some proposed hydrogen and green-industry projects have been delayed, while there is still uncertainty in the scale and pace of data centre growth.
The ISP therefore tests different futures rather than assuming every proposed project will proceed on schedule.
AEMO is also partnering with the Australian Government to deliver a Demand-side Statement of Opportunities (DSOO), which will improve understanding of changes in energy demand, the opportunities and barriers to overcome. The draft DSOO is due to be published in December this year for consultation, and we would welcome your feedback on the report.
Meeting the industrial ambition for electrification while avoiding unnecessary investment and cost requires integrated planning, from both the top down and the bottom up.
From the top down, the ISP considers the needs of the NEM as a whole and its intersection with the gas systems. It models the changing mix of generation, storage and transmission required to replace retiring coal, meet future demand and satisfy government emission policies at least cost to consumers.
It is clear that the least-cost path for the NEM is renewable energy connected through transmission and distribution, firmed with storage and backed by gas generation. But those investments can’t be considered independently of where new demand emerges or how it operates.
In reality, investments are interdependent. The transmission and distribution system depends on where generation and new industrial demand locate. Storage requirements depend on when energy is available and when industry needs it. Transport choices may depend on where electricity infrastructure can be developed, while electricity investment depends on the routes and industrial hubs that ultimately emerge.
This is a system-of-systems challenge. Planning the energy, industrial-process and transport systems in an integrated way can reduce the total investment required across all three.
The objective is not simply to minimise the cost of the electricity system. It is to support a secure, reliable and internationally competitive industrial transition at the lowest overall cost.
That is where the bottom-up perspective becomes indispensable.
A new electric furnace may have a large connection requirement, but its real effect on the power system depends on its operating profile. Does it run continuously? Can it ramp? Can heat or intermediate products be stored? Can some processes be scheduled differently without compromising product quality, safety or commercial output?
The question is not simply how many megawatts a plant needs, but which megawatts are essential and which can move, and when.
Those questions sit at the intersection of electrical engineering, process engineering and industrial economics and they can’t be answered by a grid model alone.
The 2026 ISP has taken a step towards a more joined-up picture, with deeper consideration of consumer energy resources, distribution networks, gas and demand-side factors.
As we look toward the 2028 ISP and beyond, the better our planners can understand the size, timing, location and genuine flexibility of prospective loads, the better we can plan the energy system to support Australia’s industrial growth while keeping costs down for all consumers.
That brings me to flexibility, in two forms: flexibility in time and flexibility in place.
On a bright spring day in the NEM, rooftop panels and grid-scale solar farms can produce extraordinary volumes of electricity in the middle of the day, when grid demand may be low.
On Saturday 19 September, rooftop solar met 102% of South Australia’s total demand, meaning that rooftop solar was meeting all local consumer demand and 38 megawatts (MW) was used to charge grid scale batteries, allowing them to shift that power to the evening peak.
When the NEM commenced 28 years ago, that level of abundance would have been difficult to imagine.
Today, a growing number of grid-scale and residential batteries absorb a proportion of that solar energy in daylight hours and shift it into the evening peak. Energy shifted by grid-scale batteries has more than tripled since last year, halving “spill” from solar generation and significantly lowering evening peak prices.
But storage is not the only way.
Industrial facilities that can increase consumption in periods of renewable abundance and reduce it during periods of tight supply can create value for themselves and for the wider system.
For some operations, that may mean shifting a process. For others, it could mean storing heat, adjusting a production schedule, making intermediate materials ahead of time, or integrating on-site generation and batteries.
Our recent analysis suggests that industrial load was voluntarily shed or shifted across half of the top 50 demand hours of FY26, affecting just over 10% of industrial load and reducing demand by 5.4 gigawatt hours (GWh).
Of course, some industrial loads must operate continuously, and others can’t be interrupted without serious safety, technical or commercial consequences. Flexibility must be engineered around those constraints, and it underscores why AEMO’s collaboration with researchers and industry is so important.
The value of flexibility also applies to location.
For example, the best locations for industrial hubs may be those that meet the needs for industry and reduce the need for network investment. Similar joint challenges exist for heavy freight, where the best routes for national charging infrastructure may depend on where the electricity network investment occurs, and vice versa.
The ISP shows that, for example, if a hydrogen industry develops at scale, co-locating electrolysers with grid-scale solar could materially reduce the need for network investment. Flexible electrolysers could help absorb output when renewable supply is high.
The ISP forecasts almost two-thirds of the remaining coal fleet retiring by 2035.
Replacing that capacity while meeting rising demand requires timely investment in generation, storage, transmission and system security.
There is a substantial project pipeline, but delivery is complex.
The question I leave with this forum is broader than how to electrify high-temperature industry. It is how we integrate that electrification into a secure, reliable and least-cost power system.
The closer we can bring together process designers, industrial investors, researchers and energy planners to work on this problem, the better the outcome for Australian industry and the 24 million consumers who depend on the NEM.
Thank you.