The TL:DR
- NSW and Victoria face increased blackout risks due to delays in energy projects and transmission lines.
- Coal plant retirements, like Eraring and Yallourn, heighten reliability concerns.
- 4.6 GW of new renewable projects are progressing but may miss connection deadlines.
- AEMO urges industrial users to prepare for power-downs to reduce blackout risks.
- Timely execution of government-backed energy projects is critical to grid stability.
The energy outlook for New South Wales (NSW) and Victoria has worsened, with an increased risk of blackouts over the next few summers. The 2024 Electricity Statement of Opportunities (ESOO), released by the Australian Energy Market Operator (AEMO), highlights that delays in key infrastructure projects, including renewable energy and transmission developments, are threatening the stability of electricity supply in these regions.
AEMO chief executive Daniel Westerman emphasized that while investments in new generation and storage are progressing, delays in project development and commissioning continue to pose significant risks to reliability. “The urgency for the timely delivery of transmission, generation, and storage, and use of consumer electricity resources to support the grid, remains to meet consumers’ energy needs,” said Westerman. This comes at a time when coal-fired power stations are being retired, particularly with the Eraring Power Station in NSW set to close by 2027, and Yallourn Power Station in Victoria scheduled for closure in 2028.
According to AEMO, new renewable energy projects totaling 4.6 gigawatts (GW) are expected to improve the outlook. However, many of these projects will not achieve full grid connection by their scheduled dates, further exacerbating the risk of blackouts. This increased vulnerability will particularly affect NSW and Victoria over the next four summers, and South Australia in the 2026-27 summer. Moreover, the mothballing of several gas and diesel plants in South Australia, along with a one-year delay in the critical EnergyConnect transmission line connecting South Australia to NSW, has contributed to this deteriorating outlook.
In response, AEMO is urging large energy consumers, such as industrial facilities, to prepare for potential power-down requests to manage demand during high-risk periods. This strategy, known as Interim Reliability Reserves, will allow AEMO to minimize the risk of blackouts for residential consumers.
Federal and state government initiatives, including the Victorian Renewable Energy Target and the NSW Electricity Infrastructure Roadmap, are expected to play a critical role in addressing these reliability risks. However, the timely execution of these projects remains uncertain, and any further delays could worsen the outlook for the grid.
In the longer term, the outlook beyond 2028 improves as large-scale renewable energy and storage capacity are expected to come online. The much-delayed Snowy 2.0 pumped hydro project, now expected to be commissioned in 2028, is one of the key developments anticipated to boost grid stability. Yet, AEMO’s forecast suggests that both NSW and Victoria could remain at risk of breaching reliability standards until all planned projects are delivered.
Despite these risks, federal Energy Minister Chris Bowen has expressed confidence in the system's resilience, citing AEMO’s procurement of interim reserves as a safeguard against blackouts. However, the ESOO report warns that unless all state and federal schemes deliver their designated generation and storage capacity on time, these reliability challenges may persist for years to come.
Image: Courtesy of NASA