Households to do the heavy lifting in the clean energy transition under market operator’s plan

Households to do the heavy lifting in the clean energy transition under market operator’s plan
  • PublishedJune 26, 2024

Australia’s energy market operator has forecast nearly 80 per cent of homes will be powered by rooftop solar by 2050, potentially reducing the need for investment in “utility-scale” wind and solar farms.

Without better coordination of batteries to store the power being generated, the Australian Energy Market Operator (AEMO) has warned billions more will need to be spent on storage: “increasing the costs that are reflected in consumer bills”.

AEMO has released its latest blueprint to decarbonise the power grid by 2050, mapping the transition away from coal to a system dominated by renewables.

Under the plan, all of Australia’s coal-fired power stations, producing about 21 gigawatts of energy, will retire by 2038 to meet the government’s climate targets. This is earlier than the operators themselves have forecast.

smoke coming out of stacks
New South Wales, the ACT and South Australia will share policy ideas on how to reduce gas emissions.(ABC News: Michael Barnett)

To replace them and to meet future demand, a six-fold increase in large-scale wind and solar is required but AEMO has warned planned projects are “not progressing as expected” because of slow approvals, community resistance and rising costs.

Given the challenges, some experts tracking the transition have raised doubts about the federal government’s ability to reach its target of 82 per cent renewables by 2030.

“Australia’s energy transition is well underway, with renewable energy accounting for 40 per cent of electricity used in the past year,” said AEMO chief executive Daniel Westerman.

But he warns there’s a “real risk that replacement generation, storage and transmission may not be available in time when coal plants retire”.

“And this risk must be avoided,” he said.

About 6GW of renewable energy needs to be plugged into the grid each year to avoid a short-fall but currently only about 3GW is being added annually.

Perhaps acknowledging these problems, AEMO appears to have placed a greater emphasis on households, noting the take-up of rooftop solar, electric vehicles and hot water pumps “has the potential to reduce the need for utility-scale solutions”.

Last coal - Daniel Westerman
Daniel Westerman says Australia’s clean energy transition is well underway.(ABC News: Andrew Altree-Williams)

Solar and batteries ‘slashing bills’

Australians are taking matters into their own hands: about one in three of households has rooftop solar, with a capacity of 20 GW, and that’s expected to grow to four in five households by 2050, generating 72 GW of power.

Rooftop solar contributed more electricity to the grid in the first three quarters of this year than large-scale solar, wind, hydro or gas.

Graph showing mix of energy generation sources
Australia’s future mix of power generation sources according to AEMO’s Integrated Systems Plan.

Without better coordination of household batteries to store all of that power, an extra $4 billion will need to be spent on large-scale storage: “increasing the costs that are reflected in consumer bills”.

The Smart Energy Council – which is represents large-scale renewables companies – has called for a “national battery booster program” to increase uptake.

“Australians want more solar and batteries because they know it’s slashing their power bills,” said chief executive John Grimes.

“A national support program for home batteries will ease the power bill shocks in peoples’ homes, further stabilise the grid, and cut pollution.”

A cluster of houses at Alkimos Beach all with rooftop solar panels.
One in three Australian houses now has rooftop solar.(ABC News: Briana Shepherd)

More transmission lines given green light

Amid a heated political debate about the best way to decarbonise Australia’s power grid, AEMO has once again declared that renewables, backed by batteries and firmed by gas, to be the most cost-effective solution.

The market operator did not model the Coalition’s alternative nuclear power plan because its blueprint is based on current government policies and the technology is not currently permitted under Australian law. 

However, it referenced the most recent CSIRO GenCost report which found nuclear was one of the most expensive ways of generating electricity, and would not be built quickly enough to replace the coal exiting the grid.

Energy Minister Chris Bowen said AEMO had tested 1000 scenarios to identify the lowest-cost plan that will provide reliable power between now and 2050.

“It is in stark contrast to the Coalition’s anti-renewables nuclear plan which will see Australians pay hundreds of billions for the reactors alone, would provide at best 4 per cent of Australia’s energy needs by 2050, and could add $1000 a year to energy bills,” he said in a statement.

The Coalition has not yet released its full energy policy, but it’s been promoting a greater take-up of rooftop solar, amid growing concerns in regional Australia about the massive expansion of large-scale renewables and transmission projects.

AEMO has mapped an extra 10,000 kilometres of high-voltage transmission lines that need to be built between now and 2050 to connect far-flung projects to consumers but several of the projects underway are strongly opposed by farmers.

In this latest blueprint, AEMO has given the green light for another seven transmission projects to be urgently built across Queensland, New South Wales and South Australia.

Map of Australia illustrating proposed network of transmission lines.
AEMO has mapped an extra 10,000km of transmission lines that need to be built between now and 2050 to connect renewables projects to consumers. Five projects are underway and in its latest report, and it has given the green light to another seven. 

Time and cost pressures are rising with AEMO estimating transmission costs alone have increased by 30 per cent.

Gas the ‘Ringo’ star of the transition

In keeping with the federal government’s Future Gas Strategy, the report states the small but crucial role gas will play as the safety net of the system, particularly during “renewable droughts” and periods of extreme demand.

AEMO this week issued a “risk or threat notice” for east coast gas supplies following a cold spell, a lack of renewable power and an outage at the Longford gas plant in Victoria – the biggest source of gas in southern Australia.

It warns “further investment will be required” in the gas sector to ensure reliability, including more supply, upgrades and expansions of existing pipelines, import terminals and increased storage.

Two power transmission towers in the middle on an open field with a sunrise in the background.,
AEMO says an extra 10,000km of transmission lines need to be built to support the clean energy transition.(Supplied: Facebook/ Power and Water)

These statements have been welcomed by the Australian Pipelines and Gas Association’s Steve Davies who has used a Beatles reference to illustrate the role gas will play.

“The wind droughts of the past three months in southern Australia have proven the importance of gas generation, and the ISP recognises our grid will get more volatile as the transition progresses,” Mr Davies said.

“Solar and wind are the Lennon and McCartney of the transition, while gas is doing its job as Ringo.

“But just because gas isn’t the lead, doesn’t mean it shouldn’t be supported as part of our future electricity system.”

SOURCE: ABCNEWS

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