Cheapest path to energy and climate goals locked in
More data centres, delaying the phase-out of coal and warnings that a slow transition could pose reliability risks are part of the grid operator’s renewed plan for a clean electricity system at minimal cost.
The cheapest route – solar and wind powered by storage and backed by gas – has been reconfirmed in the Australian Energy Market Operator’s 20-year roadmap for the main grid serving the eastern states.
The market operator plans 120 gigawatts (GW) of renewable energy, 55 GW of dispatchable storage and 14 GW of flexible gas generation by 2050; These predictions are not far from the predictions made in 2024, the last edition of the integrated system plan.
Minor adjustments were made to the cheapest path to reflect higher costs for wind and lower costs for solar and batteries.
By mid-century, 6000 km of new transmission is less than what is marked in 2024; Some projects have been scaled back or canceled due to policy changes, while others are already operational.
Consistent with previous forecasts, electricity consumption is expected to almost double by 2050, driven by the electrification of transportation and industry as well as the expansion of data centres.
Households are using and producing more energy, and this trend is expected to continue, with 87 GW of small-scale solar, 27 GW of behind-the-meter batteries and 9 GW of storage from electric vehicles by 2050.
Thanks to the rise of rooftop solar and batteries, utility-scale electricity use in homes is projected to drop by 40 percent (despite more electric cars in garages), while commercial use will increase by 90 percent.
“Australian consumers are world leaders in rooftop solar and are now adding home batteries and electric vehicles,” said AEMO CEO Daniel Westerman.
The 2040 retirement of all coal power plants has been postponed to 2049 to reflect the Queensland government’s plan to expand its fleet.
AEMO says a nationwide coal retirement could come sooner than expected as cheap solar power challenges the operating economics of aging generators.
“Two shifts” may become more common; This involves improving the plants so that they can be shut down during the intermediate seasons and restarted during the busy winter and summer months.
The market operator describes the lowest-cost mix of generation, storage and transmission that will replace coal power plants and meet climate commitments as the “optimal development path”.
Three scenarios are integrated into this path: “step change”, “slower growth” and “accelerated transition”.
Confidence in the “step change” scenario is growing among energy experts, with stakeholder surveys seeing it as the most likely of the three scenarios modeled in the 2026 draft report.
AEMO also released figures on what delays to transmission, generation and storage projects will mean as the extended life of aging coal generators is seen as a risk to power system reliability.
“While momentum for investment and delivery continues to build, challenges remain in delivering essential infrastructure at the pace required,” Mr. Westerman said.
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