Australia Grid Reliability Hinges on On-Schedule Renewables and Storage Build

The 2023 Electricity Statement of Opportunities from the Australian Energy Market Operator finds that Australia's National Electricity Market will meet the Reliability Standard in all regions except Victoria in 2028-29, provided that renewables, storage and transmission projects proceed on schedule. Delays to government schemes and energy transition measures would produce reliability gaps in multiple regions from 2025-26, but IEEFA notes these gaps are small and can be addressed without extending Eraring Power Station's operating life.

In the central scenario where government schemes and other actions do not proceed on schedule and distributed energy resource growth is weaker, the New South Wales reliability gap following Eraring's closure in August 2025 is forecast at 191 MW in 2025-26, rising to 250 MW in 2026-27 and 285 MW in 2027-28. AEMO notes that the 2026-27 gap could be filled by 252 MW of eight-hour duration storage, or 477 MW of solar paired with 238 MW of four-hour storage. NSW installed 829 MW of rooftop solar in 2022 alone and is targeting 930 MW of firmed capacity through the Capacity Investment Scheme.

IEEFA emphasises that the forecast reliability gap does not support keeping Eraring's full 2,880 MW capacity operating, as the station is approximately ten times larger than the identified shortfall. AEMO has identified 248 GW of proposed projects across the National Electricity Market — 173 GW of variable renewable energy and 74 GW of dispatchable resources — that are not yet included in any ESOO scenario due to insufficient project maturity. NSW alone has 68 GW of proposed projects in the pipeline, a figure larger than the NEM's entire existing capacity of 59 GW.

The ESOO highlights the importance of keeping the energy transition on schedule rather than relying on coal plant extensions as a reliability backstop. IEEFA also notes that the Interim Reliability Measure — a stricter standard setting 0.0006% unserved energy — is not a major focus of the 2023 ESOO, which IEEFA considers appropriate given the broad stakeholder opposition to extending the measure beyond its original temporary mandate. Australia's reliability outlook is manageable with targeted storage additions and demand-side measures, provided renewable energy development timelines are maintained.

Key figure — 248 GW — total proposed energy projects identified by AEMO across the National Electricity Market, including 173 GW of variable renewables, not yet included in ESOO forecasts.