Explainer: AEMO’s 2024 Integrated System Plan
In five key points, we’ve summarised AEMO’s ISP into a quick explainer.
In the news this week you may have seen the Australian Energy Market Operator (AEMO) released its 2024 Integrated System Plan (ISP), detailing a roadmap for the energy transition and future electricity demand, generation, transmission, and storage in the National Electricity Market (NEM) through to 2050.
The Plan finds that renewable energy, combined with energy storage and backed up by gas-powered generation is the most affordable and reliable way to supply electricity to homes and businesses in Australia as it transitions to net zero.
However, if we are going to have the gas to run the power stations – where we need it, when we need it – we need more natural gas exploration, extraction and investment in infrastructure.
We’ve put together a (highly) abbreviated explainer. If you want to dive into the full version, you can read that here.
Key Points:
- Increasing Renewable Energy:
- As coal plants retire, renewable energy, enhanced by battery storage and gas generation, is identified as the most cost-effective solution for providing electricity.
- Gas-powered generation (GPG) remains crucial for stability, especially during renewable energy shortages and peak demands.
- Back up by Gas-Powered Generation:
- The ISP forecasts the need for 15 gigawatts of GPG by 2050, compared to 11.5 gigawatts today
- With about 9.3 gigawatts of current GPG capacity set to retire, there will be a need to replace it and add another 3.5 gigawatts – meaning a total of 12.8 gigawatts of new GPG needs to be built.
- More and more, GPG will play a role during peak demands and to back up variable renewable energy.
- Optimal Development Path (ODP):
- The ODP outlines the most cost-effective way to meet energy policies and emissions reduction targets.
- It includes the construction of around 10,000 km of new transmission projects by 2050 and a significant increase in grid-scale renewable energy capacity.
- Scenarios Considered:
- Step Change: Supports rapid energy transition to limit global temperature rise, seen as the most likely scenario.
- Progressive Change: Reflects current policies with a slower transition due to economic and supply chain challenges.
- Green Energy Exports: Assumes a faster transition with a focus on exporting green energy.
- Risks and Challenges:
- Timely investment decisions are crucial but are hindered by regulatory and planning uncertainties.
- The need for flexible gas capacity poses a challenge to Australia’s current gas supply infrastructure.
Want to learn more about the role gas and renewables play in our energy system? Check out the articles below.
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