AEMO plan sees no need for gas in transition to renewables

A new report from the Australian Energy Market Operator (AEMO) shows that Australia’s largest grid can rapidly transition to renewable energy, with the modelling showing coal can be rapidly replaced with no need for any new gas-fired generation.

The AEMO 2020 Integrated System Plan, released today, shows a clear pathway for a rapid transition to 90 per cent renewable energy in the 2030s.

According to the government agency responsible for the electricity system new gas-fired power is not essential for a grid increasingly based on renewable energy, and gas prices would need to stay low if it was to compete with alternatives.

The AEMO roadmap details what an optimal national electricity market would look like to 2040 if it was designed with a focus on security, reliability and the lowest cost for consumers.

Its integrated system plan, the result of 18 months consultation and analysis, describes a diverse system built on large and small-scale renewable energy supported by a range of “dispatchable” power sources that can be turned on and off when needed.

It said renewable energy may at times provide nearly 90 per cent of electricity by 2035, the amount of gas-fired power will fall as pumped hydro and batteries come online and there is no place for new coal-fired generation.

The findings have been welcomed by the Climate Council, with senior researcher Tim Baxter saying that AEMO’S report shows that renewable energy is Australia’s best option for clean, cheap and reliable power.

“The market operator has made clear that the renewable energy industry, in the world’s sunniest and windiest inhabited continent, can power Australian homes, businesses and heavy industry.

“Wind and solar backed by storage are now the cheapest form of new generation in Australia, which means lower prices for everyone,” he said.

Climate Council chief executive Amanda McKenzie said that AEMO’s report shows that the current push for gas expansion from the National COVID-19 Coordination Commission was unnecessary and undesirable.

“We can transition to a renewable-powered energy grid without the need for any new gas. New gas is expensive, polluting and a poor public investment.”

“Our recently released Clean Jobs Plan shows we can create 15,000 jobs in renewable energy, while setting Australia up for the future and tackling climate change. Clean energy is a no brainer.”

“The report also shows that despite gas industry claims, an ever-deeper penetration of renewable energy doesn’t rely on growth in gas.

“Those scenarios where wind and solar provide more of Australia’s energy needs see the lowest need for all fossil fuels, including gas.”

AEMO said the plan focused on what was best for consumers and could deliver an average $11bn in net benefits across all scenarios considered, but would require major investment in new transmission lines, with the cost of these projects having increased by 30 per cent.

The greatest economic benefit, more than $40bn, is forecast to come from a rapid shift to renewable energy in line with the United Nations sponsored Paris Agreement on climate change.

The roadmap suggests solar panels backed by small batteries would provide between 13 per cent and 22 per cent of electricity by 2040, running alongside more than 26 gigawatts of new large solar and wind farms needed to replace 15-gigawatts of coal-fired generation that is scheduled to shut.

Support for these would come from between 6.0GW and 19GW of dispatchable power, new systems designed to manage the more flexible grid and significant amounts of new transmission infrastructure.

Renewable energy zones such as those proposed in New South Wales would be developed.

Audrey Zibelman, AEMO’s chief executive, said it was a “no regrets” plan for investment that could develop a modern, resilient, affordable power system.

She said the issue for policymakers was no longer whether renewable energy was the best economic choice, but ensuring it was properly integrated into the grid.

“We’ve now shifted from wondering whether wind and solar are our cheapest resource to a new set of problems which is: how do we efficiently integrate these resources into the system so that we can take full advantage of the fact that for the first time in this industry we can use free fuel?”

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