AEMO’s ISP Forms Roadmap for a Lower Carbon Future

Written by Energy Action

                                                                            Renewable Energy


The Australian Energy Market Operator (AEMO) has just published its landmark 2020 Integrated Systems Plan (ISP) to help chart an optimal course for development of the National Electricity Market (NEM) over the next 20 years.

Released every two years and conducted in consultation with market stakeholders, the ISP forms a roadmap for investment in the lowest cost, and fastest transition of Australia’s electricity system away from coal-fired generation. It’s intended to be used to identify future ISP projects and plan investment and to inform consumers, investors and policymakers.

The ISP models the potential scenarios of the NEM’s future, forecasting the use of a range of energy sources required to deliver reliability and stability. Under AEMO’s optimal model, which outlines a mix of distributed energy resources, solar, wind, hydro and battery storage, it expects periods where up to 90% of electricity demand is delivered through renewable sources.

The ISP model included the following expected changes to 2040:

  • 15 GW of coal generation requirements which equates to 63% of coal-fired generators
  • Distributed energy generation capacity is expected to double or even triple.
  • Over 26 GW of new grid-scale renewables is needed
  • 6-19 GW of new dispatchable resources are needed in support including pumped hydro, batteries and gas

In a statement, AEMO’s Managing Director and CEO, Audrey Zibelman said: “The ISP analysis confirms that as our coal plants retire, the least-cost transition of the NEM will be to a highly diverse portfolio consisting of distributed energy resources (DER) and variable renewable energy (VRE), supported by multiple dispatchable resources.”

“To enable the expected rise in renewable energy, the ISP identifies strategic investments in transmission infrastructure and renewable energy zones (REZs), which when coupled with low-cost firming resources, will be the most cost-effective way to add generation capacity and balance variable resources across the NEM.”

AEMO also emphasised the importance of managing the costs associated with constructing transmission lines to ensure that energy consumers derive the full benefit of the grid’s transformation.

The ISP outlined project-specific investments that would support the optimal development target, and if executed, would deliver $11 billion in new market benefits over the next two decades. Encouragingly, some of these projects are already underway and are accompanied by a range of other actionable initiatives.

According to AEMO, with sufficient investment over the next 20 years in the transition of the NEM, there is the potential to attain energy reliability and security, and reduce emissions.  When combined with the growing number of businesses advancing their own plans for net zero emissions, a lower carbon future could arrive even earlier.