AEMO says energy market reliability standards can be met, but more work is needed.
The Australian Energy Market Operator (AEMO) has warned that reliability standards hinge on projects being delivered on schedule.
AEMO’s 2025 Electricity Statement of Opportunities (ESOO), released today, outlines a 10-year outlook for the National Electricity Market (NEM).
The report finds the reliability outlook has improved compared to last year, but only if more than 50 gigawatts (GW) of new generation, storage and transmission in the pipeline are delivered on time.
“The 10-year investment pipeline to manage energy reliability is healthy,” AEMO CEO Daniel Westerman said.
“Considering the large volume of generation retirements over the next decade, the timely delivery of new generation, storage and transmission, along with the operation of consumer energy resources to support reliability, remain critical.”
AEMO forecasts operational consumption will rise 21 per cent from 178 terawatt hours (TWh) in 2024-25 to 229 TWh by 2034-35, driven largely by data centres, business electrification and new industrial loads.
The past year saw a record 4.4 GW of new supply commissioned. Over the next five years, commissioning is expected to accelerate to between 5.2 GW and 10.1 GW annually.
This new capacity must replace 11 GW of retiring coal, including Eraring, Bayswater, Vales Point, Yallourn and Callide B.
Two reliability outlooks were assessed. Under the Government Schemes and Actionable Developments case – which includes Capacity Investment Scheme projects, Renewable Energy Transformation Agreements, and major transmission builds – reliability standards are expected to be met in most years.
Even so, South Australia is forecast to face a 25 MW gap in 2026-27, linked to Torrens Island B’s retirement and delays to Project EnergyConnect.
The stricter Committed and Anticipated Developments case, which only counts projects that meet AEMO’s commitment criteria, shows more acute risks.
Queensland faces an 80 MW gap in 2025-26 due to reduced generator availability and commissioning delays. South Australia’s gap rises to 390 MW in 2026-27 if Torrens Island B closes as scheduled, though AGL and the state government are considering a two-year extension that could avert the shortfall.
Earlier forecast gaps after Eraring’s 2027 retirement in New South Wales and Yallourn’s 2028 exit in Victoria have been revised away, but AEMO cautions system security challenges – including fault current, voltage stability, and outage scheduling – will remain.
Due to the identified South Australian gap, AEMO will request the Australian Energy Regulator to trigger the Retailer Reliability Obligation for 2026-27. It will also rely on its Reliability and Emergency Reserve Trader panel to procure reserves where required.
The ESOO stresses that timely delivery of both grid-scale assets and orchestrated consumer energy resources is vital.
Delays from supply chain bottlenecks or policy slippage could see reliability risks re-emerge across all mainland NEM regions in the early 2030s.