The AEMO CEO says the agency has big plans for energy stability.

In a keynote address at Australian Energy Week 2024 (transcribed here), CEO of the Australian Energy Market Operator (AEMO) Daniel Westerman detailed the organisation’s role in Australia’s transition to renewable energy. 

His speech emphasised the importance of preparedness, adaptability, and collaboration in overcoming the challenges posed by extreme weather events and the evolving energy landscape.

He outlined AEMO's unique position in overseeing the dispatch of energy and managing real-time operations from its control rooms. 

He noted recent extreme weather events that have tested the resilience of Australia’s energy systems, with the summer of 2024 seeing severe storms including one in Victoria that flattened high-voltage transmission towers near Geelong. 

This incident led to a significant electrical fault, disconnecting over one-third of Victoria’s online generation, including all units of the Loy Yang A power station. 

Similarly, Western Australia experienced a supercell thunderstorm on 17 January that toppled five transmission towers, disrupting power and communications in Kalgoorlie.

Despite these challenges, Westerman says energy systems demonstrated remarkable resilience. 

In Victoria, AEMO’s control room staff reconfigured the power system to manage the crisis, drawing reserves from neighbouring states through interconnectors. 

In Western Australia, the newly implemented Wholesale Electricity Market successfully coped with repeated peak demand records during heatwaves.

The CEO stressed the importance of having a dynamic and adaptive plan for the energy transition, including AEMO’s Integrated System Plan (ISP).

“AEMO releases an updated version of this roadmap every two years, and we’re on the cusp of publishing the 2024 edition,” he said. 

“I’d like to thank many of you in this room today who have had a hand in shaping it.

“The ISP may have our name on it, but it’s a work of extensive collaboration.

“Collaboration that’s involved federal and state governments, market bodies, industry, associations representing numerous business sectors, consumers and communities, including rural and regional areas and Traditional Owner groups.

“The ISP reflects and aligns with federal and state government policies on emissions reduction to reach net zero by 2050.

“So while I won’t preempt the detail of the final ISP that will be released in a few weeks, I do want to focus on its key finding, which is this: As coal-fired power stations retire … renewable generation connected with transmission and distribution, supported by hydro, batteries and gas, is the lowest-cost way to supply electricity to homes and businesses throughout Australia’s transition to a net zero economy.”

To improve the investment environment, the CEO identified three critical elements: revenue certainty, grid connections, and social licence. 

The Commonwealth Government’s Capacity Investment Scheme (CIS) aims to accelerate the transition by delivering an additional 32 GW of clean generation and storage capacity by 2030. 

“This is clearly a step change for the Australian energy transition,” Westerman said. 

“AEMO is the Commonwealth’s CIS delivery partner, which means that we independently run the tender process and provide recommendations for the Federal Government to decide which projects receive contracts.

“The first CIS Tender is now open and is seeking 6GW of renewable generation in the NEM.

“These contracts can provide greater revenue certainty than our current market settings, and aim to unlock the significant investment needed.

“The first standalone CIS tender for clean storage capacity in South Australia and Victoria has shown that these contracts can be attractive, with an initial market response that was 32 times the tender size.

“Connecting these new projects to the grid is absolutely fundamental,” he said. 

He said collaboration would be key to managing the ongoing transition of Australian energy. 

“So yes, Australia’s energy transition is complex and challenging, and requires us all to collaborate together on the journey ahead,” Westerman said. 

“And AEMO’s Integrated System Plan, which is a work of extensive collaboration with all of our stakeholders, provides a roadmap for that journey.

“There will always be headwinds, and unexpected events.

“But our industry continues to demonstrate that we are capable of dealing with the challenges of this energy transition…through collaboration, and a laser-like focus on the interests of consumers.”