The Australian Energy Market Operator’s (AEMO) annual reliability outlook for Western Australia’s South West Interconnected System (SWIS) indicates a considerably brighter short-term capacity outlook, thanks to significant ongoing investments in the state’s electricity infrastructure.
Continued Investment Essential for Future Reliability
While the near-term outlook is positive, the report underscores the necessity for continued capacity investment from 2027 onwards to ensure a secure and reliable power supply for Western Australia.
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The 2024 Wholesale Electricity Market (WEM) Electricity Statement of Opportunities (ESOO) reveals the impressive scale of current investments in the SWIS, a level of activity described as “unseen in decades.”
This includes AEMO’s procurement of over 1,000 MW of additional capacity through its Non-Co-Optimised Essential System Services tenders, along with Synergy’s development of a 500 MW battery in Collie, slated for operation by 2026-27.
Balanced Supply and Demand in Sight
Kate Ryan, AEMO’s Executive General Manager for WA & Strategy, stated that since the 2023 WEM ESOO, there has been a substantial improvement in available capacity, with supply and demand now expected to be largely balanced by 2026-27.
Over 1,400 MW of committed generation and storage capacity are in the pipeline for 2026-27, contingent on timely delivery.
Additionally, the report predicts a faster-than-anticipated uptake of rooftop solar, primarily due to consumers installing larger, higher-capacity systems. Ryan highlighted the potential of coordinating these distributed energy resources to support a secure and dependable power supply.
Long-Term Challenges and the Need for Further Investment
Despite the encouraging near-term outlook, the report forecasts a 391 MW capacity shortfall emerging in 2027-28, escalating to 2,880 MW by 2033-34. This is attributed to the retirement of coal-fired power plants coupled with growing demand.
Ryan emphasized the need for “crucial investment in power generation, storage, demand-side response and transmission” to meet future demand and replace decommissioned coal plants by 2030 and beyond.
To address these long-term shortfall risks, the Western Australian government has implemented reforms to the Reserve Capacity Mechanism, aiming to strengthen investment signals in the WEM.
Furthermore, the Australian federal government’s Capacity Investment Scheme aims to provide additional incentives for investment in the SWIS.
Timely Delivery and Collaboration Crucial
Ryan stressed the importance of timely delivery of existing and committed capacity projects, as well as transmission infrastructure to facilitate the connection of new generation and storage projects and satisfy escalating customer demand.
In the interim, AEMO will manage a minor residual capacity shortfall this summer through an upcoming supplementary reserve capacity tender.
As the energy transition progresses, AEMO will continue collaborating with governments and industry stakeholders to address the complex challenges facing Western Australia’s power system over the coming decade.