AEMO calls for sustained investment as WA power supply outlook improves

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The latest analysis of the Western Australian Wholesale Energy Market (WEM) presents a significantly improved near-term capacity outlook compared to last year’s report but the Australian Energy Market Operator (AEMO) said continued investment in new generation, storage, demand-side programs and transmission capacity is still required, particularly from 2027 onwards.

The WEM Electricity Statement of Opportunities (ESOO) provides a 10-year view of projected electricity demand, capacity and other key parameters for the South West Interconnected System (SWIS) that stretches between Albany, Kalgoorlie and Kalbarri and serves more than 1.1 million customers.

The latest WEM ESOO shows there has been a significant improvement in available capacity in the near term. The report forecasts a “relatively small” residual capacity shortfall risk of 124 MW for 2024-25 while the supply-demand situation is now expected to be largely balanced in 2025-26 and 2026-27.

Forecast supply-demand balance, Expected scenario, 2024-25 to 2033-34 (MW).

Image: AEMO

AEMO WA Executive General Manager Kate Ryan said the improved outlook showcases the substantial investment that is currently underway in the SWIS, which is on a scale not seen in decades.

Ryan said 1,000 MW of extra capacity has been secured by tenders to AEMO and state-owned utility Synergy is building a 500 MW / 2,000 MWh battery energy storage system at Collie that is expected to be operational during 2026-27.

The report shows there is more than 1,400 MW of committed generation and storage capacity in the pipeline that is expected to be available for 2026-27, if delivered on time. Additionally, rooftop solar uptake is expected to rise at a faster rate than previously forecast, primarily as a result of consumers installing larger systems.

Despite this growth, retiring coal-fired power stations combined with increasing demand is expected to result in a forecast 391 MW shortfall emerging in 2027-28, growing to 2,880 MW by 2033-34.

These longer-term shortfalls are associated with forecast strong demand growth driven by the potential for increased industrial electrification, the emergence of a green hydrogen industry, and the strong uptake of electric vehicles, and reduced supply due to anticipated retirements of coal-fired generation.

Actual and forecast underlying consumption under three scenarios from 2023 and 2024 WEM ESOOs.

Image: AEMO

AEMO expects operational consumption to grow at an average annual rate of 4.6%, down from 5.6% in the previous forecast, rising from 17,800 GWh in 2023-24 to 27,868 GWh in 2033-34. Growth is expected to be stronger in the second half of the outlook period than in the first, averaging 7.7% annually.

Peak operational demand is forecast to grow at an average annual rate of 3.7% over the 10-year outlook period, from 4,304 MW in 2023-24 to 6,163 MW in 2033-34.

Ryan said the report shows significant opportunities exist for investment in the SWIS over the next decade as AEMO works with governments and industry to navigate the power system through what she described as a “complex energy transition.”

“Critical investment in power generation, storage, demand-side response and transmission will be needed to meet demand and replace retiring coal-fired power stations by 2030 and beyond,” she said.

“It is also critical that there is timely delivery of existing and committed capacity within the project pipeline, along with transmission to enable the connection of new generation and storage projects as well as meet growing customer demand.”

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