Urgent Investments Needed in Australia’s Energy Market: AEMO 

Share now:         Copied!

The Australian Energy Market Operator (AEMO) has released an essential update to the 2023 Electricity Statement of Opportunities (ESOO), highlighting the critical need for urgent investment in the National Electricity Market (NEM).  

This latest information significantly impacts the supply and demand outlook, underscoring the pressing need for investments to ensure reliable energy for the next decade. 

Key Updates 

  • Project EnergyConnect: Revised commissioning dates impact supply timelines, particularly affecting South Australia and New South Wales. 
  • South Australia’s Gas Generators: Mothballed generators alter regional reliability forecasts, adding complexity to South Australia’s energy landscape. 
  • New Generation and Storage: An additional 4.6 GW of new projects are now in the pipeline, promising to bolster the energy grid but requiring efficient integration. 

Urgent Need for Capacity Investments 

AEMO’s update emphasises the necessity of immediate and substantial investments in transmission, generation, storage, and consumer energy resources (CER) to mitigate reliability risks.  

While federal and state policies are expected to support these investments, further commitments are crucial for ensuring a stable energy supply. 

Reliability Gaps Identified

  • New South Wales: Increased risk between 2024-25 and 2027-28 due to delayed battery projects and revised demand assumptions. The region must address these issues promptly to avoid potential blackouts. 
  • Victoria: There are higher reliability concerns until 2027-28, affected by transmission constraints and mothballed South Australian generators. Proactive measures are needed to alleviate these bottlenecks. 
  • South Australia: A new reliability gap in 2026-27 has emerged due to delays in Project EnergyConnect and the closure of key power stations like Torrens Island B and Osborne. 
  • Post-2028: Following the planned retirement of the Yallourn Power Station and new transmission configurations in the Latrobe Valley, some improvements are expected in Victoria and South Australia. 

Strategic Actions and Investments 

  • Interim Reliability Reserves (IRR): AEMO plans to tender for IRR to support New South Wales and Victoria during potentially low reserve conditions in summer 2024-25.  
  • This move is critical to maintaining consumer confidence and preventing disruptions. 
  • Federal and State Schemes: These schemes include actionable transmission investments and anticipated growth in orchestrated consumer investments.  
  • If implemented effectively, these measures are projected to significantly reduce reliability risks. 

Detailed Analysis of Key Sensitivities 

The update reassesses three critical sensitivities from the 2023 ESOO, incorporating new data to refine reliability assessments.  

This includes understanding how delays in commissioning battery projects and revising demand allocations affect overall grid stability.  

New Generation and Storage Development Locations 

AEMO identifies strategic locations where new generation and storage projects can enhance regional reliability.  

The update stresses that further transmission development is necessary for the benefits of these new projects to be expanded. Key regions identified for potential developments include: 

  • New South Wales: Regions with high solar and wind potential. 
  • Victoria: Areas where transmission upgrades can facilitate better power flow. 
  • South Australia: Sites that can integrate new storage solutions to offset the loss from retiring thermal generators. 

Ensuring Power System Security 

Maintaining power system security has become increasingly challenging as the energy landscape shifts from traditional thermal generators to inverter-based resources (IBR).  

Substantial investments are required to support this transition. Key measures include: 

  • System Strength Services: These services, equivalent to approximately 22 synchronous condensers, are needed to ensure the stability and resilience of the power system. 
  • Voltage Control and Frequency Stability: As the grid incorporates more renewable energy sources, innovative technologies must be integrated to manage voltage fluctuations and maintain frequency stability. 

Long-Term Outlook and Policy Implications 

The update from AEMO highlights that while current policies and investments are a step in the right direction, additional efforts are necessary to fully address the forecasted reliability gaps. Over the next decade, the energy market will need: 

  • Increased Renewable Integration: Accelerating the deployment of renewable energy sources such as wind, solar, and hydro to diversify the energy mix. 
  • Enhanced Storage Solutions: Investing in advanced storage technologies like pumped hydro, large-scale batteries, and other innovative storage solutions to provide backup power during peak demand. 
  • Robust Transmission Infrastructure: Upgrading and expanding transmission networks to handle increased loads and facilitate the flow of electricity across regions. 

Government and Private Sector Roles 

Federal and state governments and private sector stakeholders play crucial roles in this energy transition. Their coordinated efforts will determine the success of these initiatives: 

  • Government Programs: Continued support through funding, policy frameworks, and regulatory adjustments to encourage investment in renewable and storage projects. 
  • Private Investments: Encouraging private entities to invest in energy infrastructure, providing incentives and creating a conducive environment for innovation and development. 

AEMO calls for urgent investment in the National Energy Market 

AEMO’s latest update to the 2023 ESOO is a loud call for urgent and comprehensive investments in the NEM.  

The energy market is at a critical juncture where timely and strategic actions will define Australia’s future.  

Ensuring a reliable and secure power supply demands a multi-faceted approach, integrating new technologies, upgrading infrastructure, and fostering collaboration between government and industry. 

As Australia transitions towards a more sustainable energy future, the focus must remain on bolstering reliability and security through strategic developments and robust policies.  

The path forward involves navigating complex challenges. However, Australia can achieve a resilient and sustainable energy landscape with decisive action and innovative solutions. 


The May 2024 update to the ESOO calls for crucial investments to fill reliability gaps in the electricity supply. Otherwise, energy users – business and residential alike – may face serious challenges in terms of power supply.  

 As an energy management consultancy specialising in the commercial and industrial sectors, Leading Edge Energy is ready to help you navigate the complexities of the NEM. We can aid you in: 

  • Determining and implementing energy efficiency measures that can reduce your dependence on the grid 
  • Exploring opportunities for solar and battery storage. 
  • Building an extensive energy management strategy with the goals of optimizing consumption and costs, and mitigating risks. 

Get started now with an obligation-free consultation. By taking the more proactive path, your business has the power to control and manage your usage and costs so you can thrive.  

Talk to your people in power at 1300-852-770 or email us at info@leadingedgeenergy.com.au to learn more. 

We source, analyse, compare and rank commercial, industrial and multisite energy quotes. Obligation Free.

Chat with one of our experienced consultants today and get the insights your business needs to help manage the risk associated with volatile electricity and natural gas markets. Our energy procurement service is obligation-free and provides a time-saving way of securing lower energy rates from our panel of fifteen energy retailers.

Leading Edge Energy is proud to be a signatory of the National Customer Code for Energy Brokers, Consultants and Retailers.