We are nearing the end of coal power in Australia. Aging coal power plants are becoming increasingly unreliable and are gradually being removed from the National Electricity Market (NEM).
The Australian Energy Market Operator’s draft 2024 Integrated System Plan (ISP), published in December 2023, predicts that the remaining coal fleet will close two to three times faster than currently announced.
As coal exits, we need to make sure we’re filling the gap left behind. In the absence of a reliable alternative that can be called on during renewable energy ‘droughts’, governments could be forced to take steps to keep coal power stations in the energy system. This will inevitably result in Australia’s carbon emissions being higher than necessary for longer than necessary.
The draft 2024 ISP provides Australia with a plan to prepare for the exit of coal. Renewable energy, firmed with storage and backed up by gas powered generation, is the cheapest way to supply electricity to homes and businesses as we transition to net zero.
As well as having the ability to switch on and off as needed, gas generation can be located close to major demand centres. This will become critical if there are delays in building the necessary electricity transmission infrastructure to connect large-scale renewable generation projects in regional areas into the system. As recent events in Victoria have shown, we also need to be prepared for significant weather events that will test the resilience of our energy systems.
In 2022, AEMO flagged that without coal-fired generation, the NEM would require 10GW of gas powered generation by 2050 to meet peak demand and for firming intermittent renewable generation if we want to meet our net-zero goals.
AEMO has since revised its forecasts, with gas now expected to play an even more important role. The NEM is now expected to require 16.2GW of gas generation by 2050 – a 60 per cent increase.
Given around 8GW of the existing 11.2GW of gas generation capacity currently in the system is also expected to retire, we need around 13GW from new projects to come online to support the massive increase in renewables1. This highlights the extent of the challenge before us.