Australia will need to invest A$14 billion (US$10 billion) in grid infrastructure to integrate a surge of wind and solar capacity as the transition away from coal-fired power gathers pace, according to the energy market operator.
Almost two-thirds of coal-fired generation will have retired by 2040, with the gap to be filled largely by solar and wind, the Australian Energy Market Operator said in the latest update to its long-term system plan. The variable supply provided by renewables will need to be coupled with other technologies such as pumped hydro and big batteries.
“To enable the expected rise in renewable energy, the Integrated System Plan identifies strategic investments in transmission infrastructure and renewable energy zones,” Audrey Zibelman, AEMO’s chief executive officer, said in a statement. Bringing the right resources into the system in a timely manner could result in an A$11 billion net benefit to consumers over the next two decades, she added.
A boom in renewable energy investment in Australia slowed markedly in 2019 as a creaking grid struggled to accommodate the surge in new capacity. Solar and wind farms have congregated in areas with a strong natural resource and access to cheap land, but also in isolated parts of the grid where the strength of the connection is weak. That has forced AEMO to curtail the output of several facilities to maintain system stability.
AEMO’s plan seeks to address that, advocating projects including the A$2.1 billion Hume Link, which aims to connect a renewables hub in southwest New South Wales and the Snowy hydro-electric project to Sydney, and the Marinus Link, which will establish a second undersea cable between Tasmania and the mainland to give the island state’s abundant wind and hydro resources access to urban centres in the southeast.
Australia will need to add 26 gigawatts of renewable power, more than double current capacity, to replace retiring coal plants, AEMO said, combined with as much as 19 gigawatts of “dispatchable” generation from pumped hydro, fast-start gas turbines and big batteries.
© 2020 Bloomberg L.P.