Four key takeaways from the new energy market roadmap

Coal power is being beaten by cleaner technology: cheap wind and solar energy, firming power from batteries, pumped hydro, and gas peaking plants, and smart networks that get the most out of them.

The grid will be able at times to run entirely on renewable energy, the Australian Energy Market Operator says.

2. Consumer is king

Consumers play a big role in the grid through their rooftop solar systems, which are on a third of detached homes with a total capacity of almost 20 gigawatts.

In the first quarter of 2023, rooftop solar supplied 12.1 per cent of National Electricity Market power – more than grid-scale solar, wind, hydro or gas. In the first half, the NEM was almost 40 per cent renewables.

But very little of this large and growing source of rooftop solar power is managed to support rather than disrupt the grid (say, by flooding it with cheap power during the day).

AEMO wants consumers to play a bigger – and more helpful – role. By 2050, it expects 72 GW of rooftop solar on nearly four in five homes, and the largest source of capacity.

Consumer energy resources can reduce the need for costly utility-scale generation and poles and wires. AEMO expects residential and commercial batteries to surge from 1 GW today to 7 GW by 2030, and 34 GW by 2050. Almost all vehicles will be electric.

Most of this storage will be “orchestrated” in “virtual power plants”, where software and time-of-use tariffs encourage customers to use or store energy when it’s cheap and abundant, and save it (and discharge it into the grid) when it’s costly and scarce. This is also known as “demand response”.

3. Costs squeeze transmission

AEMO estimates the cost of transmission has increased by 30 per cent, and the cost of generation is up too. That makes final investment decisions harder to justify.

For transmission, which is hotly opposed by farmers, AEMO has reduced its estimate of the net benefits of the vast spend by 37 per cent, from $27.7 billion to $17.45 billion.

It’s a problem we need to solve. To cope with more rapid coal plant exits, AEMO says utility-scale wind and solar capacity needs to triple by 2030 and increase sevenfold by 2050.

It’s a problem for the “green energy superpower” vision too, because that scenario – rated only a 15 per cent chance by AEMO – requires vastly more generation and transmission build than the most likely scenarios.

4. Gas indispensable, but small

The capacity of gas peaking plants must increase to 16 GW, an increase from 10 GW in the 2022 draft ISP, AEMO says. But they will be needed sparingly most of the time and play a smaller role than the gas industry hopes.

For example, in 2038 – when coal is gone – gas peakers will generate just 8.8 terawatt hours of energy, about a third of utility-scale battery generation and half of consumer battery generation.

They will have a brief surge in the mid-2040s, and then fall away again, never regaining their peak generation of a decade ago.