Renewables could meet 100% demand in Australia at certain times of day by 2025, report says

Energy market operator notes penetration of renewable generation reached record high of 57% twice in 2021

Renewables will meet 100% of consumer demand for electricity at certain times of the day by 2025 if large-scale wind and solar development continues at current rates, the Australian Energy Market Operator has said.

Aemo’s annual grid reliability snapshot, to be released on Tuesday, notes the penetration of renewable generation in Australia reached a record high of 57% twice in 2021 – in April and again in August.

If Australia’s power system is engineered appropriately, based on current trends “there could be up to 100% instantaneous penetration of renewables at certain times of the day throughout the year by 2025”, it says.

The report predicts that total existing and committed large-scale solar and wind capacity, as well as solar panels installed by businesses and households, will be almost 10 gigawatts greater by 2025 than today.

It predicts an additional 8.9 GW of distributed solar capacity will be installed by 2025 and “these solar systems alone could supply up to 77% of total electricity demand at times by 2026”.

Growth in power generation from solar panels is also driving down minimum demand on the electricity grid. As solar systems allow households and businesses to be self-sufficient through generating and storing their own energy, they draw less power from the grid.

As a consequence, Aemo predicts, all mainland states will experience minimum operational demand during the next five years, which is the lowest level of demand from the grid during daytime. Declining minimum demand can create engineering challenges in the grid.

The assessment forecasts there will be enough electricity supply to meet reliability standards for at least the next five years.

Aemo has not included the impact of the Snowy 2.0 expansion in the reliability assessment because it says the transmission to carry the energy to consumer centres is not yet committed. Snowy 2.0 is expected to add 2GW of capacity “gradually” between 2025-26 and 2026-27.

But the assessment does include the new taxpayer-funded gas-fired power station at Kurri Kurri in NSW, which is expected to be operational by 2023-24.

The chief executive of Aemo, Daniel Westerman, said in a statement the positive outlook for grid reliability reflected “a combination of newly committed generation, storage and transmission developments”. He said 4.4GW of new generation and storage capacity would come online over the next five years as well as new investments in transmission infrastructure.

“Significant renewable energy investments, and well progressed dispatchable generation projects, including gas plants, pumped hydro and battery storage, will all help replace retiring coal and gas plant,” Westerman said.

“The new dispatchable capacity will also enable higher penetrations of low-cost solar and wind generation into the market in the coming years.”

The snapshot notes Australia’s ageing coal power fleet is becoming less reliable. It notes the retirements of the Yallourn power plant in Victoria and two units of the Eraring plant have been brought forward, and the market operator expects the Vales Point power station will close in 2029.

Aemo says the reliability of the thermal generation fleet “generally stayed at historically low levels in 2020-21” and predicts “overall plant reliability will be at similar poor levels over the coming summer”.

“While some plant improvements are expected in the near term, most generators are anticipating a trend of decreasing reliability in the longer term, increasing supply scarcity risk.”