The Australian Energy Market Operator has issued an urgent call for investment in new power generation, storage and transmission in WA to avoid supply shortfalls in just two years as State-owned coal-fired power stations are retired.

In its 2023 Wholesale Electricity Market Electricity Statement of Opportunities, AEMO forecasts a 945MW shortfall in 2025-26 but around 4000MW by 2032-33 as coal-fired generation disappears, electric vehicle uptake and air-conditioning demand increases along with industrial demand linked to future-facing minerals production needed for decarbonisation.

It said the forecasts were a significant shift from its 2022 outlook, where the additional capacity requirement was expected to begin in 2025-26 and reach 303 MW by 2031-32.

AEMO Executive General Manager Western Australia and Strategy, Kate Ryan, said: “The rapid energy transition is now fuelling very strong forecast growth in electricity demand.

“At the same time, we’re transitioning to new, lower-emissions sources of supply and managing the phase-out of coal-fired generation.

“This year’s reliability outlook highlights the need for significant and sustained investment in additional capacity, fast-tracking the pipeline of generation, storage and demand-side projects, along with investment in transmission infrastructure, to meet reliability standards.

“Increased capacity investment is needed for a robust and resilient power system capable of meeting future demand and facilitating the transition to a cleaner and more sustainable energy future.

“It’s critical that the pipeline of energy projects is developed in a timely way to alleviate forecast reliability challenges and support the ongoing energy transition.”

A high-demand growth scenario took into account the emerging hydrogen sector.

“In the high demand growth scenario, which projects greater development of a green hydrogen sector, operational consumption is projected to triple to 58.9 TWh by the end of the outlook period,” the report said.

“The primary driver of this demand growth is business electrification, along with growth in air-conditioning, electric vehicles, and the expansion of industrial loads.

“Consistent with the SWIS Demand Assessment, AEMO’s forecasts in the business sector reflect industry’s commitments to electrify production processes as part of plans to decarbonise operations, particularly for alumina refineries.

“Notably, demand forecasts now factor in the demand associated with green hydrogen production, reflecting governments' growing commitment to developing a green hydrogen export industry.

“Meanwhile, WA is poised to benefit from a new wave of critical mineral development, encompassing mining and processing activities that fuel the global and national energy transition.

“A variety of large industrial load projects are currently in various stages of development and are expected to be connected to the SWIS during this outlook period. Notable projects include lithium production and processing, as well as ammonia or hydrogen production.”

In the longer term, AEMO forecasts a significant opportunity for investment in WA, with capacity needed to meet growing demand and ensure a reliable and secure power system.

The need for capacity investment was reflected in the SWIS Demand Assessment, which identified the need for significant investment in firmed renewables across the next 20 years.

“Information collected by AEMO from a range of sources indicates there is already a substantial pipeline of wind and solar generation, battery storage, gas or diesel peaking generation and demand side management (DSM) that may be developed over coming years in response to this opportunity,” the report said.

“Further opportunities also exist for additional capacity projects to contribute to future SWIS reliability needs.

“Investment in the capacity of the electricity network will also be required to enable this new capacity to be delivered to customers.

“AEMO projects that network constraints will impact the electricity sent out to meet demand in the SWIS sub-regions, particularly beyond 2025-26. These constraints align with those outlined in the SWIS Demand Assessment, which outlines network augmentation options to be implemented in stages to address network transfer capability requirement over the next 20 years.

“The forecast reliability gap highlights both the urgency and significance of the capacity investment opportunity in the SWIS.

“Timely development of new capacity and network augmentations will be required over the coming decade to meet growing demand in the SWIS and replace coal-fired generation as it is retired.

“By proactively addressing barriers and facilitating the progression of these projects, AEMO and other agencies can contribute to a more reliable power system.”

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