We discuss the recent 2022 Integrated System Plan, published by the Australian Energy Market Operator and the roadmap it outlines to achieve net zero emissions by 2050.
On 30 June 2022, the Australian Energy Market Operator (AEMO) published the 2022 Integrated System Plan (ISP) for the Australian National Electricity Market (NEM).
The 2022 ISP provides a roadmap to achieve net zero emissions by 2050. It does this by supporting a transition to firmed renewable energy with a simultaneous reduction in coal, oil, gas and other fuels. Firming capacity is critical to achieve this. As traditional generators exit the market, firming capacity from dispatchable storage will maintain the stability of the NEM to counteract the intermittent availability of solar and wind energy.
The goal of the AEMO is to deliver low-cost renewable electricity with reliability and security. The AEMO does not suggest that this will be an easy path, with many complicating factors including:
- meeting increasing electricity demand while switching to firmed renewables;
- increasing firming capacity from dispatchable storage, hydro and gas-fired generation to firm renewables; and
- the transformation of the transmission network for two-way electricity flow.
Step Change – the road forward
The AEMO considered Australia’s progress towards net zero in four different scenarios. The scenario considered the most likely to eventuate and the best foundation for planning is called “Step Change”. It represents the quickest transition to net zero emissions without a technological breakthrough in hydrogen.
To achieve net zero emissions by 2050 under the Step Change scenario:
- distributed electricity resources (such as household solar panels) will need to increase fivefold;
- utility-scale renewables (such as wind and solar farms) will need to increase ninefold; and
- 10,000 km of transmission lines will need to be installed throughout the NEM.
Phasing out coal
The NEM currently relies on 23 GW of dispatchable firm capacity from coal fired generation. The phasing out of coal is a key element of the Step Change scenario, with the projected withdrawal of 14 GW of coal capacity by 2030 (8.4 GW of which has already been announced) and a complete withdrawal of coal as early as 2040. This creates both challenges and opportunities. Without coal it is predicted that 46 GW of dispatchable storage will be required by 2050. The AEMO considers this to represent the most pressing need of the next decade.
The potential for Hydrogen Superpower
Hydrogen can provide important services to the NEM and can be used to provide energy storage and system services such as flexible frequency response and demand response. The AEMO recognises hydrogen as a potential energy disruptor. The development of a hydrogen export industry in Australia would require technological advancements and a significant progression of the industry.
The AEMO considered the role of hydrogen in Australia’s energy mix in the scenario called “Hydrogen Superpower”. That model assumes the creation of a hydrogen export industry in Australia. The AEMO does not currently prefer a scenario that incorporates the “Hydrogen Superpower” but may do so as the industry develops over time.
HopgoodGanim Lawyers can assist you in facilitating your renewables project. For more information, please contact our Resources and Energy Team.