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The body that keeps the lights on in Australia's biggest electricity system has scaled back its warnings about the risk of power shortages in coming years amid efforts to buttress supplies.
But the Australian Energy Market Operator (AEMO ) said delays in major generation and transmission projects could still imperil reliability across the Eastern States as a raft of coal- and gas-fired power stations closed.
The agency said the risks of supply not meeting demand could emerge as soon as this summer in South Australia, before spreading to New South Wales and Victoria in following years.
In its latest forecast for electricity supplies, AEMO said the outlook had "improved" compared with recent years thanks to the progress made on 5.7 gigawatts of new generation and storage developments.
Among them was 3.9 gigawatts — and 13.5 gigawatt hours — of batteries, 1.2 gigawatts of large-scale solar and about 400 megawatts of wind power.
Australians are adding more and more solar power every year, boosting supplies. (ABC News: Daniel Mercer)
On top of this, AEMO noted that households and businesses continued to add ever more solar power to their rooftops, although this tended not to lower "the scale of peak demands during extreme hot conditions".
Crucially, the agency said the outlook had also improved on the decision to extend the life of the 2.9 gigawatt Eraring coal plant north of Sydney — Australia's single biggest generator.
At the same time, it forecast lower growth in energy consumption and peak demand "for most" regions across the national electricity market, which covers Australia's eastern seaboard.
Pressure eases, but remains
AEMO chief executive Daniel Westerman said the immediate pressure on the system has eased.
"Investments in renewable generation and storage continue to increase, and the pipeline of new projects continues to expand, filling the gaps being left by the retirement of Australia's ageing coal fired power stations," Mr Westerman said.
"Compared to last year's report, the reliability outlook has improved, assisted by the progress of 5.7 gigawatts of grid-scale generation and storage, and 365km of new transmission developments.
"This progress, along with delivery of transmission projects, a coal plant extension, and higher contribution from rooftop solar, has improved the reliability outlook."
Despite this, Mr Westerman maintained that it was "critical" new generation and transmission projects be delivered on time.
He said a failure ensure the timely delivery of projects — or the early retirement of existing assets — could undermine the outlook.
To insure against the risks in the short-term, AEMO said it would seek a requirement for retailers to ensure they had enough supplies to meet a one-in-two-year peak in demand.
An extension to the life of the giant Eraring coal plant has improved reliability forecasts. (AAP/Greenpeace)
As well as this, the agency would try to lock in contracts with big energy users to ensure they could pare back or switch off their demand in the event the system came under severe stress.
"It is critical that expected investments in generation, storage and transmission are delivered on time and in full," he said.
"If delays occur to projects already underway or further investment does not materialise, then the outlook for reliability will deteriorate."
Among the projects set to come online in the coming years are a 750 megawatt gas plant in the Hunter Valley, pumped hydro storage facilities including Snowy 2.0 and about 8,500 megawatts of large-scale batteries.
Offsetting this, however, would be the loss of Eraring in 2027, and the Yallourn and Callide B coal plants in Victoria and Queensland, respectively, in 2028.
More immediately, AEMO noted South Australia was poised to lose the 800 megawatt Torrens Island gas-fired plant in June 2026 and the Osborne gas generator six months later.
Read with caution: analyst
Dan Lee, a market analyst from Global Roam, said AEMO's forecast — known as the electricity statement of opportunities, or ESOO — needed to be treated with caution.
Mr Lee said that too often the outlook's forecasts were taken to an extreme limit and used to claim blackout risks were imminent or inevitable.
In an article published online, he said such an analysis of the outlook was either disingenuous or wrong, arguing the report was designed to pre-empt potential shortfalls.
"The ESOO has a long history of projecting supply shortfalls," Mr Lee wrote.
"This was true even two decades ago. And despite these projections, the (national electricity market) has, largely, maintained high levels of reliability since inception.
"So does that mean that the AEMO are really awful at forecasting, and always have been? No.
"The report is meant to inform the market, so it is an intentional feedback loop. If it does that, then it has achieved its primary purpose — even if that means that what then unfolds is different than the forecast.
"This in itself therefore almost guarantees that the reliability outlook will be 'inaccurate'."
Founder and CEO of Nexa Advisory Stephanie Bashir. (ABC News: Peter Healy)
Nexa Advisory, a clean energy consultancy, said the outlook from AEMO should be a source of "comfort" for electricity users.
"This year's ESOO reflects an improved reliability outlook due to new renewable energy generation storage developments and transmission projects progressing," said Nexa chief Stephanie Bashir.
"The ESOO is reassuring, but it is still incumbent on governments — particularly New South Wales — to ensure there are clear delivery plans and accountability mechanisms to deliver transmission, generation and storage projects in the most timely and cost-effective way."